Eddie Lampert will get another shot at keeping Sears Holdings Corp. from liquidation.

The Sears chairman and former chief executive officer must put up US$120 million by Wednesday to get a chance to take part in an auction against other bidders, Ray Schrock, Sears’s lead attorney, said at a court hearing Tuesday.

“Hopefully, we’ll be able to get to an auction and have a chance to save Sears as a going concern,” Schrock said.

Lampert will be able to use debt he controls as part of his bid, a process known as “credit bidding,” Schrock said. But the company will reserve the right to review that offer and compare it to others.

The 126-year-old company, the descendant of the mail-order catalog that reshaped American commerce, rejected a US$4.4 billion offer for selected stores from Lampert and his hedge fund, ESL Investments Inc., on Friday. As many as 50,000 jobs are at stake.

As late as Monday night, the company had told involved parties it was planning to announce a liquidation before the market opened on Tuesday in New York, according to a person with knowledge of the matter.

Not Pre-Approved

The bankruptcy judge overseeing the case said that means Lampert’s use of a credit bid has not been pre-approved. Lampert’s last offer was funded by conversion of debt to equity.

Lampert and ESL Investments rank as Sears’s biggest shareholder and creditor. They held about US$2.5 billion in Sears debt as of September, the result of multiple attempts to keep the chain afloat. Lampert has shuttered hundreds of money-losing stores, cut more than US$1 billion in annual expenses, and spun off units such as Lands’ End Inc.

It’s not the first frenzied deal Sears has made during its bankruptcy. When the company was in court Nov. 27 to finalize bankruptcy financing, a hedge fund affiliated with ESL swooped in to ignite a last-minute bidding war for the right to lend to it.

“Most likely, the bid still goes nowhere,” said Jared Ellias, a professor at the University of California’s Hastings College of Law. “But it’s part of the dance of ‘having every last conversation.’ Liquidating an American icon is something one should do one’s best to avoid.”