Dive Brief:

• Sears Canada is reportedly consulting with law firms in Canada for restructuring advice, including a possible Chapter 11 bankruptcy filing, according to the New York Post. Sears Canada, whose CEO announced his departure last week, has denied the report. 

• Meanwhile, a real estate development company owned by a major Sears shareholder has declined to join Sears CEO Eddie Lampert in funding a $400 million short-term loan. Bruce Berkowitz, the chairman of St. Joe Co. who also runs mutual fund firm Fairholme Funds, which owns 24% of Sears stock, said the terms don’t meet St. Joe’s investment criteria. St. Joe’s may contribute a smaller amount.

• Sears was unable to sell Sears Canada earlier this month and has also had trouble finding a buyer for its Auto Center business.

Dive Insight:

Sears Canada denies that it has sought advice from bankruptcy lawyers and maintains that it has the inventory to get through the holidays, but potential investors don’t appear to believe that. Meanwhile, while Lampert’s own hedge fund is floating the retailer a Hail Mary-loan to get through the holidays, some experts, including Yahoo Finance’s Jeff Macke, say the deal will benefit Lampert himself more than the once-iconic retailer. 

“This isn't illegal or perhaps evil but it's certainly opportunistic,” Macke says of Lampert’s loan terms. “In exchange for giving Sears the right to live through Christmas, Lampert will collect either $10 million in interest or his pick of 25 stores that could easily be worth more than half a billion. If this were the movie 'It's a Wonderful Life' Lampert would be playing both George Baily and Mr. Potter the evil banker.”