Sears Holdings, 125 years old and once the largest retailer in the U.S., is readying a bankruptcy filing that could come as soon as this week, the Wall Street Journal reported on Tuesday citing people familiar with the situation.

The Journal reported that the company has hired M-III Partners to help with the bankruptcy proceedings.

M-III has been working with Sears for more than two years, a source familiar with the situation told CNBC on Tuesday. The source requested anonymity because information is confidential. Sears has enlisted an array of advisors over the past few years, including Lazard, as it grapples with its debt-load, CNBC has previously reported.

CNBC on Wednesday reported the retailer has begun to line up bankruptcy financing. It is the clearest sign yet that the department store chain may finally file after years of losses

The news comes as the embattled retailer faces a $134 million debt due on Oct. 15, which the company has warned it may not meet.

Representatives from Sears and M-III didn't immediately respond to CNBC's request for comment.

Also on Tuesday, Sears said it added restructuring expert Alan Carr to its board — about a year after longtime Sears investor Bruce Berkowitz stepped down from his board seat.

A bankruptcy filing would cap years of efforts by CEO Eddie Lampert to keep the company afloat by steadily selling off assets, like the Craftsman tool brand and hundreds of Sears and Kmart stores. Lampert, who has a controlling ownership stake in Sears, personally owns roughly 31 percent of the retailer's shares outstanding, according to FactSet. His hedge fund ESL Investments owns about 19 percent.

Lampert, though, is running out of time. Analysts say Sears would need to generate more than $1 billion a year to keep running, as its sales continue to erode. The retailer's last profitable year was in 2010, and it burned through $1.8 billion in cash in its operations during 2017 alone. Analysts argue a lack of investments in stores and workers over the years — as retailers like Walmart, Target and e-commerce giant Amazon expanded — put Sears in the position it's in today.

"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 said in an email to CNBC on Tuesday evening. "The firm simply has no reason to exist."

Earlier this year, Lampert put forward a restructuring proposal through ESL after flagging fears about its ability to pay the looming Monday payment. But years of selling off assets and real estate have left Sears with little collateral it can offer lenders. It has there been unclear whether Sears' current debt-holders will continue to support its restructuring efforts.

The longer Sears waits to file for bankruptcy, the more the value of its assets arguably decline. Meantime, the company is headed into the crucial holiday season, during which it will need sufficient confidence from vendors to agree to stocking up its shelves, even as bankruptcy rumors loom.

Ultimately, though, until Sears files for bankruptcy, the power remains largely in Lampert's hands.

Over time, the CEO has poured more than $1 billion into the retailer when other options remained scarce. If no rescue emerges, Lampert could help it to fund its October payment, keeping Sears out of bankruptcy for at least another month.

Alternatively, barring any other form of salvation, he and Sears' other creditors can begin to brace for bankruptcy.

"We have businesses that are profitable, and we have stores that are profitable, but we have other things that offset it. You know, it's almost every year like these four things are working, but all of a sudden these two are not," Lampert told CNBC in an interview earlier this year following Sears' annual shareholders meeting. "Would it have been better for me as an investor for me to walk away? So far, I've said no."

The company was operating roughly 900 Sears and Kmart stores as of the latest quarter, compared with more than 4,000 when it merged with Kmart in 2005. This would be boutique advisory firm M-III's biggest assignment, should it move forward with the bankruptcy filing for Sears Holdings.

Sears shares have fallen more than 80 percent so far this year to trade near 57 cents. The stock had traded as high as $195.18 in April of 2007, and earlier this week hit an all-time low of 56 cents, bringing Sears' market cap to $63.8 million.