What happened

After two days of a crushing sell-off on concerns about an impending bankruptcy filingSears Holdings Corp. (NASDAQ:SHLDQ) rode the broader comeback in the market today. Shares of the struggling retailer were up as much as 17.6% this morning and were trading up 5.2% as of 11:07 a.m. EDT.

The exterior of a Sears department store

Image source: Sears.

So what

There doesn't seem to be any fundamental reason for the recovery in Sears stock, as the company is facing a $134 million debt payment due on Monday that seems likely to force the company's bankruptcy filing, barring a last-minute rescue by CEO Eddie Lampert. His hedge fund ESL Investments has already bailed out the retailer a number of times. But Lampert has said he would not lend Sears any more money.

According to the latest report from The Wall Street Journal, lenders are pushing Sears toward a liquidation, rather than a restructuring. Lenders including Bank of AmericaWells Fargo, and Citigroup are only willing to provide short-term, debtor-in-possession financing to give Sears enough time to sell inventory and close stores, allowing it to complete a liquidation. 

Other news outlets, including Reuters, have reported that Sears has begun missing payments to vendors, signaling that the company is simply out of cash. As of Aug. 4, it had $193 million in cash on its balance sheet, but significant liabilities.

Now what 

Today's gains might be Sears' last gasps before a bankruptcy filing on Monday. Sears' volatility in recent months has been largely driven by day traders, and that seems to be the case again today as trading volume this morning has already exceed its daily average. With shares trading at just $0.50, it seems likely that the stock will go to zero by Monday, when a bankruptcy filing is expected. The big question at this point is whether Sears will liquidate as the bankers are asking it to do, or come up with a restructuring plan.

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