(Bloomberg) -- 99 Cents Only Store LLC is considering a bankruptcy filing as the discount retailer faces a liquidity shortfall, according to people familiar with the situation. 

The more-than-370-store company is also weighing potential liquidation since a sales process for some of its assets has stalled, said the people, who asked not to be identified discussing a private matter. Discussions are ongoing, multiple options including an out-of-court agreement are being considered and stores remain open, they added. 

S&P Global Ratings said last week that 99 Cents would likely remain in deficit on a free operating cash flow basis for the foreseeable future amid increased lease expenses, “leading to elevated risk of a near-term liquidity crunch.” That as the firm “has heavily relied on asset monetization to generate liquidity while the company’s turnaround initiatives have been unable to produce meaningful performance improvement.” 

The retailer, which has been exploring a debt restructuring, is working with a cadre of advisers including Jefferies Financial Group Inc. and law firm Milbank, Bloomberg News reported earlier this month.

Messages left with Jefferies and Milbank were not immediately returned Thursday while a 99 Cents representative couldn’t immediately be reached.

Reorg earlier reported the retailer is preparing for a possible Chapter 11 filing as soon as next month.

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