According to the New York Times, the company is working with restructuring expert Joseph A. Bondi of Alvarez & Marsal, and attorney Mark Thompson of Simpson, Thatcher & Barlett on a possible Chapter 11 bankrutpcy filing.

The paper also reported the company is working with investment bank Evercore Partners.

One company that has a stake in what Sirius does is satellite outfit EchoStar. Charles Ergen, who controls that company as well as Dish Network, recently acquired most of the $300 million debt that matures Feb. 17.

Industry watchers are speculating as to whether Ergen will bid to purchase Sirius, and a bankruptcy filing by the company could force him to bid now rather than wait for his chance to make an offer in bankruptcy court.

Why is Sirius even considering a BK filing? Like many complex business issues, there are no easy answers.

But what is obvious is the company has spent a lot of money on promotion and marketing.

One of the most high-profile expenses incurred by Sirius during the last few years would be the 2006 hiring of Howard Stern, which published reports claim cost the company anywhere from a one-time $225 million stock bonus for meeting subscriber quotas to Sirius paying the shock jock and his staff $500 million.

Another factor may be falling new car sales. MarketWatch reports the current drop of U.S. auto sales means fewer cars equipped with satellite receivers going out showroom doors.

If Sirius, which has more than $5 billion in assets, files for bankruptcy it will be the second-largest company to do so this year says the Times, citing stats from Capital IQ’s database. The number one BK slot for the year so far belongs to Smurfit-Stone Container Corporation, which had more than $7 billion in assets before it filed for BK in January.

Of course, if Sirius does file for BK one thing is for sure. It will give Stern something to talk about.