Mr Lampert's hedge fund originally submitted a last-minute bid for Sears valued at $4.4bn (£3.5bn) ahead of the December 28 deadline, to stop the retailer from being liquidated.
Sears Chairman and ESL Investments founder Eddie Lampert will have one more chance to rescue the iconic retail chain from liquidation, a judge ruled on Tuesday. The deal could keep 425 of the stores open. According to lawyers close to the matter, one of the main sticking points was that the $4.4 billion bid, which included $1.3 billion in financing from three financial institutions, didn't include cash.
Now Sears faces full liquidation of its assets if the judge doesn't decide to give Lampert more time to improve his offer, which Reuters' sources say he and his hedge fund, ESL Investments Inc., are attempting to do.
US Bankruptcy Judge Robert Drain in the Southern District of NY, who is presiding over the case, could decide to give Lampert more time to improve his bid, the Reuters sources said, adding that a bankruptcy auction for Sears' assets is not due until January 14.
Lampert's bid said he plans to offer jobs to 50,000 Sears and Kmart employees.
Creditors, though, would prefer that Sears liquidate, as Lampert - the firm's former CEO - made a variety of controversial moves during his tenure as chief executive and they would prefer to cut their losses. But itis still possible that those wishing to shutdown the company will bid more for the assets than Lampert is offering, which wouldset the company on the path of shutdown once again rather than remaining in business.
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It's not the first frenzied deal Sears has made during its bankruptcy.
The revised deal was reached after days of "virtually round-the-clock negotiations", Sears attorney Ray Schrock told the court.
The creditors have argued that forgiveness of his debt should not be accepted as part of the bid, because Lampert loaned Sears the money when he was CEO.
The costs, which include bills from lawyers and financial advisers, are expected to exceed US$200 million, those sources said.
A hearing is scheduled for Tuesday in bankruptcy court. Without an agreement, Sears faced the possibility of liquidation.