SEARS CRASHES

Shares of Sears were down as much as 12% on Wednesday after a report from Bloomberg's Lauren Coleman-Lochner said that at least one "medium-sized" vendor has halted shipments to the store.

Coleman-Lochner, citing people with knowledge of the matter, reported that insurance firms for the retailer's vendors are seeking to reduce coverage of orders to the company.

As Coleman-Lochner writes, "Suppliers rely on credit insurance to protect themselves against not getting paid for products they ship to retailers," adding that, "Under the terms of most policies, insurers are allowed to cancel if a retailer's operations deteriorate enough that its viability is in doubt."

Vendor insurers took similar measures on JC Penney last year, but resumed coverage as the company's sales rebounded, Coleman-Lochner reported, noting that while this action from insurers is a "red flag," retailers can recover.