Sears Holdings is teetering on the edge of bankruptcy.

The retailer faces a daunting $134 million debt payment due Monday that looms increasingly large since the company has so far failed to work out a deal with CEO and largest shareholder Eddie Lampert to restructure its debts and sell more assets.

With heavy losses mounting, it may not have enough to make that payment on time.

Now, the company is working with advisers to prepare a potential bankruptcy filing as early as this week, according to the Wall Street Journal and CNBC.

CNBC also reported Sears contacted financiers to secure potential financing to operate in bankruptcy.

Sears did not immediately respond to requests seeking comment. ESL Investments, Lampert's hedge fund, declined to comment.

Investors ran for the exits Wednesday driving Sears shares down 16.83 percent to 48 cents at the time the markets closed. Shareholders typically lose their entire investment in bankruptcy.

A Chapter 11 bankruptcy filing would give Sears a chance to cut debt and close more stores in a bid to survive as a smaller, profitable company.

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But retail bankruptcies are risky because many end up in liquidations. In 2017, for example, Toys R Us filed for Chapter 11 bankruptcy protection with hopes of emerging as a stronger company but then ended up liquidating in 2018 after failing to reach a deal with its creditors.

Despite several hundred store closures in recent years, Sears Holdings still had 506 Sears locations, including 482 full-line department stores, as well as 360 Kmart stores, according to an Aug. 4 public filing.

Sears has been battered for years by digital competitors, the department store sector's challenges, costly pensions and a failure to invest in stores and e-commerce.

Lampert has pulled off a series of financial transactions in recent years that have given Sears more runway, extending its life despite significant sales declines. He has also approved hundreds of store closures and massive cost cuts.

But critics say Lampert has put his hedge fund at the front of the line to collect key loan payments and assets in the event of Sears' demise.

The company pays him and his hedge fund an estimated $200 million to $225 million annually in debt payments on loans he's extended to the company, according to estimates by Debtwire and Susquehanna International Group reported by USA TODAY in June.

Lampert said last month in a letter that Sears "must act immediately" on his latest proposal, in his investment capacity, to sell more assets and shed debt.

Neil Saunders, managing director of GlobalData Retail, who has tracked the decline of Sears, said there's "a slim chance" that Sears could avoid bankruptcy by reaching a restructuring deal. But it won't save the company, he said.

"In our view, this is the inevitable end game of an effective liquidation process that has been going on for many years," Saunders wrote. "Throughout that time the sale of various assets along with injections of cash from Eddie Lampert have kept the ailing retailer from going under. However, the activity is akin to bailing out water from a holed ship: It keeps the vessel afloat for longer but does nothing to sort out the underlying problem."

Lampert's most recent proposals have included an offer to buy the Kenmore house appliances brand from Sears for $400 million, which would provide critical cash to Sears as it seeks a lifeline.

But retail industry analysts say store closures and asset sales haven't fixed the company's overarching challenges.

"The problem in Sears case is that it is a poor retailer. Put bluntly, it has failed on every facet of retailing from assortment to service to merchandise to basic shopkeeping standards," Saunders wrote. "Under benign conditions, this would be problematic enough but in today's hyper-competitive retail environment it is a recipe for failure on a grand scale. That failure has manifested itself in lost customers, lost market share, and a brand that has become tarnished and increasingly irrelevant."

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.