What happened

Shares of Sears Holdings (NASDAQ:SHLDQ) slumped on Thursday after two pieces of news raised the odds of a bankruptcy filing. Reuters reported that the retailer has started missing payments to vendors, and The Wall Street Journal reported that a group of lenders was pushing for a liquidation. The stock was down about 22% at 11:30 a.m. EDT.

So what

Three vendors speaking to Reuters said that Sears has missed scheduled payments over the past few weeks. Some vendors have already been tightening repayment terms based on Sears' precarious financial situation, in some cases demanding cash up front. At least one vendor that spoke to Reuters has already withheld a shipment after the retailer missed a payment.

A vacant store.

Image source: Getty Images.

On top of the vendor payment woes, The Wall Street Journal reported on Thursday morning that major lenders are pushing for a Chapter 7 liquidation instead of a Chapter 11 reorganization. The lenders might see no path forward for Sears, which has been struggling for many years.

This news comes one day after The Wall Street Journal reported that Sears had hired an outside firm to prepare for a potential bankruptcy filing. Sears has about $134 million of debt due next week.

Now what

It now looks very likely that Sears will file for bankruptcy soon. When vendors stop getting paid, that's the end of the line.

The only remaining question is whether the company will be liquidated or reorganized. Given that Sears has spent next to nothing maintaining its stores in recent years, a reorganization doesn't appear likely to work.

After years of kicking the can down the road with asset sales and financial maneuvers, it looks like the end is finally near.

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