Were Sears to liquidate its assets, it would become one of the most high-profile victims in the wave of bankruptcies that has swept the retail sector in the last few years, as the explosion in online shopping exacerbates the fierce price competition facing brick-and-mortar stores. It also closes the curtain on Kmart, which is owned by Sears Holdings.
The 11th hour negotiation is yet another twist in the rocky journey of Sears, whose fate has been hanging in the wind, particularly since it filed for Chapter 11 bankruptcy October 15.
Lampert's ESL Investments said late last month it was prepared to pay $4.4 billion for numerous retailer's remaining assets, including about 425 Sears and Kmart stores.
Lampert's is the only bid created to keep Sears open.
While Lampert and ESL sought to keep Sears afloat, creditors had been keen on the firm's liquidation so that they could recoup at least some of what they are owed. Drain said other parties could submit new or improved bids, and Sears' financial advisers would let them know if they would be considered at the auction. In recent years, Toys "R" Us, RadioShack and Sports Authority have followed that path to the graveyard.
The decision was predicated on the condition that Lampert's hedge fund provide a $121 million deposit by Wednesday, as the former CEO makes a last-ditch effort to save the company.
Lampert said he plans to offer jobs to 50,000 Sears and Kmart employees.
Lampert entered the bid through Transform Holdco LLC, an affiliate of his private equity firm, ESL Investments Inc.
But it wasn't immediately clear just how much additional cash Lampert will pay for the assets. The attorney does not represent Lampert. The creditors' attorneys question whether the terms of those loans unduly benefited Lampert and his hedge fund rather than Sears.
Lampert will be able to use debt he controls as part of his bid, a process known as "credit bidding", Schrock said.
Troubled US retail giant Sears is considering a revised takeover bid from its chairman's hedge fund after being left on the brink of liquidation.
If Sears doesn't accept the bid, it will likely have to ask the court for permission to start shutting down the business.