By Lorraine Bailey
(CN) – Sears, once a powerhouse of American retail, filed for Chapter 11 bankruptcy Monday and said it will close 142 stores amid mounting debt.

Sears Holding Corp., which owns Sears and K-Mart stores, finally succumbed to its massive debt burden when it was unable to make a $134 million debt payment due Monday.

The high-profile announcement, following similar declarations of bankruptcy by Toys “R” Us and Radioshack, marks another chapter in the struggle of brick-and-mortar retailers to adapt to the rise of online shopping.

Sears’ bankruptcy papers, filed in the Southern District of New York, indicate that the 132-year-old company has $11.3 billion in total debt and $6.9 billion in assets.

Founded in 1886, Sears began as a mail-order catalog business that transformed the way Americans shopped by offering rural customers a large selection of products at clearly labeled prices. Before Sears, these customers were often confined to higher-priced, narrow selections at a local general store.

As the U.S. population became more urban, Sears began opening large department stores and became an anchor for shopping malls around the county. It was the largest retailer in the world by revenue until surpassed by Wal-Mart in 1989.

Chicago’s skyline proudly features the 110-story skyscraper still commonly referred to as the Sears Tower, a monument now to the company’s former dominance. Originally built in 1973, the tower served as the company’s headquarters until 1995, and was the largest skyscraper in the world at the time. It has since been renamed the Willis Tower.

In a statement, Sears says it plans to close 142 unprofitable stores near the end of the year, in addition to the previously announced closure of 46 stores to be closed by November. There are currently about 700 Sears and K-Mart stores open nationwide, down from 1,700 at the end of 2014.

Eddie Lampert, the company’s largest shareholder, stepped down as CEO as part of Monday’s bankruptcy announcement, but will stay on as chairman of the board. The restructuring process will be managed by three of Sears’ top executives.

“The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability,” Lampert said in a statement. “Our goal is to achieve a comprehensive restructuring as efficiently as possible, working closely with our creditors and other debtholders, and be better positioned to execute on our strategy and key priorities.”

The company says it intends to remain in business rather than shut down completely and will “reorganize around a smaller store platform of EBITDA-positive stores.” EBITDA stands for earnings before interest, taxes, depreciation and amortization, and is used to determine how much cash flow comes from current operations.

Sears is currently negotiating a $300 million loan with ESL Investments, Lampert’s company, which has also expressed interest in buying a portion of Sears’ stores.

The company’s share price fell 21 percent Monday on the news to trade at 0.32 cents per share. Five years ago, Sears traded at $42.54 per share.