Sears Holdings Corp agreed on Tuesday to consider a revised takeover bid from Chairman Edward Lampert, temporarily staving off a liquidation that would have spelled the end of the 126-year-old US department store operator.
The bid now requires Lampert to deposit $120 million by 4 p.m. Wednesday through his ESL hedge fund.
Lampert's offer also included a proposal to forgive $1.3 billion of debt he holds in exchange for ownership of the reconstituted Sears, a bankruptcy maneuver known as a credit bid that has also drawn objections from creditors.
The demise of the Big Store Lampert in 2002 bought Kmart debt as the discount retailer entered Chapter 11 bankruptcy protection, and at the same time purchased Sears shares.
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.
By deeming Lampert's revised bid acceptable, Sears started the clock on an auction period that ends on January 14. He called the expectation of a revised bid from Lampert a "good development" that could allow Sears to "survive as a going concern, at least in part".
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Lampert said he plans to offer jobs to 50,000 Sears and Kmart employees. 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.
A judge still needs to approve the agreement.
Sears received another lifeline after the company's chairman and largest shareholder promised to line up the necessary financing to keep the struggling department store chain afloat.
But the deadline passed without any word from Sears on the status of the bid.
A hearing in the case is scheduled for Tuesday. Lampert, though, protested the decision, highlighting the extensive costs of Sears' bankruptcy advisors, a person familiar with the situation told CNBC. Those creditors, which include Sears landlords and bondholders, have also questioned Lampert's pre-bankruptcy transactions with the retailer. Even as Sears' brick and mortar competitors established effective e-commerce operations Sears - a pioneer in catalog sales - failed to do so.