Sears Holdings has contacted banks in recent days to arrange the financing necessary to file for bankruptcy after 125 years in business, people familiar with the situation told CNBC.

The stock plummeted 32 percent, to 40 cents a share, in Wednesday's premarket trading after the report.

The so-called "debtor-in-possession" loan, which companies need to have enough liquidity to keep running the business during bankruptcy, is the clearest sign yet that the department store chain may finally file after years of losses. Sears has a $134 million debt payment due Monday that it previously said it may not be able to cover.

A bankruptcy filing is not yet definite and still could be averted. Sears' CEO, Eddie Lampert, has kept the company afloat through financial maneuvering and pouring his own money into the company. He may again choose to do so.

His hedge fund, ESL Investments, has also proposed a restructuring, and he has offered to buy some of Sears' remaining key assets through his hedge fund. It is unclear whether Sears' lenders will agree to it.

Lampert, who has a controlling ownership stake in Sears, personally owns some 31 percent of the retailer's shares outstanding, according to FactSet. His hedge fund ESL Investments owns about 19 percent.

As it weighs bankruptcy, Sears has been working with advisors including Lazard and M-III Partners, according to the people who asked not to be identified because the discussions are private. It has been working with M-III for more than two years, the sources said.

The Wall Street Journal reported Tuesday that Sears hired M-III Partners to prepare for a bankruptcy filing that could come as soon as this week.

Representatives from Sears and M-III did not respond to CNBC's request for comment.

Lampert, a hedge fund manager called "the next Warren Buffett," bought Kmart in 2004. A year later, he merged it with Sears, in which he had a controlling stake.

Both department stores were already struggling with the rise of new competition, but Lampert believed he could revive the business in part by taking advantage of its lucrative real estate.

The challenges though, proved greater than expected. And the timing was bad — a few years before the Great Recession — which drove down sales of new home products like washers and dryers. The rise of the online shopping brought it a new giant with which it struggled to compete. Sears' 140,000-square-foot stores were monstrous as foot traffic declined.

The retailer's last profitable year was in 2010. Analysts say Sears would need to generate more than $1 billion a year to keep running, as its sales continue to erode. It has fewer than 900 stores still running across the U.S. today with under 90,000 employees, compared with what used to amount to more than 3,500 Sears and Kmart locations combined, and hundreds of thousands of workers. Layoffs have been steady as store closures mount.

Sears has been in survival mode for more than a decade. Since its merger with Kmart, Sears has spun off Lands' End, sold the Craftsman tool brand to Stanley Black & Decker and closed hundreds of stores, 250 of which he put into a real estate investment trust offshoot known as Seritage.

Efforts to keep the company alive by selling its best assets to pay down debt have left it with little money to reinvest in its stores. They have also left shelves progressively barren, as key vendors, wary of Sears' future, have demanded tighter payment terms.

"That failure has manifested itself in lost customers, lost market share, and a brand that has become tarnished and increasingly irrelevant," GlobalData Retail Managing Director Neil Saunders told CNBC late Tuesday. "The firm simply has no reason to exist."

It is also grappling with an underfunded pension. In 2015, it reached a final agreement with PBGC a federal government oversight organization that guarantees individuals' pension that acts as a parachute if a company goes bankrupt. As part of the deal, Sears gave the PBGC a lien on many of its most valuable remaining assets. That deal also thereby lessened Sears' ability to pour all of its proceeds back into reviving the company.

Sears lost $508 million during the second quarter as sales tumbled at a double-digit pace. Its adjusted loss before interest, taxes, depreciation and amortization widened to $112 million, compared with a loss of $66 million during the same quarter a year earlier. Sales at stores open at least 12 months also fell 3.9 percent during the second quarter, which ended Aug. 4.

ESL in August made a bid to buy the storied Kenmore appliance brand and home improvement division, as one more attempt to put money into the company. Sears appointed a special committee earlier this year to balance out the potential conflict of interest inherent in ESL's bid.

The committee has frustrated Lampert with its slow pace, sources familiar with the situation have told CNBC. It has refused to approve Lampert's rescue plan, worried about opening the company up to litigation, Reuters reported on Wednesday. Industry experts have suggested Sears may have made itself vulnerable to lawsuits by its strategy of selling its valuable assets to pay down its debt, instead of putting more money towards rehabilitating the company or paying down its pension.

When those efforts stalled, ESL last month asked Sears' creditors to agree to restructure their debt in a detailed presentation that highlighted the risks it was facing. With so few key assets left, however, the retailer has little to offer its lenders by way of collateral.

Lampert sounded the alarms in a Sept. 13 blog post, saying Sears needed to restructure its debt or sell off some assets if it wanted to continue as a "going concern."

"It is imperative that the company reduce debt, adjust its debt maturity profile and eliminate the associated cash interest obligations," he wrote. "We continue to believe that it is in the best interests of all our stakeholders to accomplish this as a going concern, rather than alternatives that could result in significant reductions in value."