Lampert entered the bid through Transform Holdco LLC, an affiliate of his private equity firm, ESL Investments Inc.
It gives Sears a chance to survive, which appeared to be slipping way heading into the hearing.
Since Sears filed for Chapter 11 bankruptcy protection October 15, Lampert has been fighting to keep a few hundred Sears and Kmart 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.
"U.S. 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 on his bid, the sources said", Reuters notes. An auction for Sears' assets is not due until January 14.
But the deadline passed without any word from Sears on the status of the bid.
Sears was down almost 94% in the past year.
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One of the most storied companies in American history may have just days left to live, as Sears Holdings Corp has rejected Chairman Eddie Lampert's takeover bid and intends to proceed with liquidation proceedings.
Once America's largest department store chain, Sears had 687 stores and 68,000 workers by the time the Illinois-based company filed for Chapter 11 bankruptcy protection in October.
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's offer did not include putting up cash to back the credit bid.
"I remember at the beginning of summer, we'd start flipping through the catalog, having to get the penny loafers of the Mary Janes, the black and white shoes", she said.
But the fact that Sears has an offer that seeks to rescue it doesn't guarantee it will escape liquidation. That raised concerns in the negotiations since the maneuver might not be allowed in court, the sources said, given ongoing investigations of Lampert's pre-bankruptcy deals, which the hedge fund manager maintains were proper.