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Sirius preparing possible bankruptcy filing: report

The move could put pressure on satellite television company EchoStar Corp, which reportedly holds a substantial amount of Sirius XM debt. The Wall Street Journal reported on Monday that EchoStar chief Charles Ergen made an offer to take control of the satellite radio company late last year, but he was rebuffed.

Sirius officials did not respond to several telephone and email messages, and EchoStar declined comment.

Sirius has been working with restructuring expert Joseph A. Bondi of Alvarez & Marsal and bankruptcy lawyer Mark Thompson of Simpson, Thacher & Bartlett to help prepare a Chapter 11 filing, the New York Times reported, adding a filing could come within days.

A Simpson, Thacher spokeswoman declined comment, and Bondi was not immediately available for comment.

Sirius has also been working with investment bank Evercore Partners, the newspaper said. Evercore could to be reached immediately.

Last week, The Wall Street Journal reported EchoStar holds about $400 million of Sirius XM debt and the satellite radio company led by Mel Karmazin is scrambling to raise $175 million by a February 17 payment date to fend off a possible takeover threat and avoid default.

Sirius XM has nearly $1 billion in debt due this year, prompting analysts to doubt its future given the sluggish credit market and a steep drop in car sales, the biggest source of new satellite radio subscribers.

Sirius XM shares saw a 23.8 percent increase in short interest from mid- to late-January -- the biggest increase on the Nasdaq, indicating that more short sellers were trading the stock.

Short sellers borrow shares and then sell them, waiting for the stock to fall so they can buy the shares back at the lower price, return them to the lender, and pocket the difference.

Sirius shares closed Tuesday's session 3.5 percent higher at 11 cents on the Nasdaq.