The bid would have kept 425 stores open and offered jobs to 50,000 of its remaining employees.
Sears received another possible lifeline Tuesday when the company's chairman and largest shareholder promised to line up the necessary financing to keep the struggling department store chain afloat.
Sears' directors had signaled interest in rejecting Lampert's $4.4 billion offer, a move that would have marked a last gasp for the once-invincible retail behemoth that employed almost 70,000 workers past year.
In addition, Lampert wanted a release from legal exposure related to a series of transactions he completed with the retailer before it filed for bankruptcy protection.
Before the stores close, however, the company is expected to liquidate current inventory by drastically slashing prices. In 2004, Kmart said it would acquire Sears for $11 billion.
The fate of Sears remains to be determined.
Sears was down almost 94% in the past year. Lampert's last offer was funded by conversion of debt to equity.
By deeming Lampert's revised bid acceptable, Sears started the clock on an auction period that ends on January 14.
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. Should Lampert's offer falter again, he will forfeit more than $17 million from his deposit to Sears creditors.
His financial maneuvers extended Sears' runway but also became a point of controversy in the bankruptcy.
Sears had until Friday, Jan. 4, to accept the bid, but the deadline came and went without any update from Sears about its status.
But critics say that numerous company's injuries have been self-inflicted, and that Lampert's playbook has accelerated Sears' demise.
ESL denied those allegations but Qureshi said Tuesday creditors are still assessing what they believe are "significant viable claims against ESL". "Tools we buy from here", said Bhardi Patel, a Sears shopper.
The iconic American retailer has rejected Lampert's bid and is set to announce its liquidation plans Tuesday morning, CNBCreported. The once-dominant retailer has about 500 stores still in operation.
U.S. Bankruptcy Court Judge Robert Drain on Tuesday said other parties can submit additional or improved bids before the Monday auction and that Sears will be obligated to consider all its options.
"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. A liquidation would put roughly 68,000 people that Sears now employs out of work.
Tuesday's court hearing in the Southern District of NY comes a day after the retailer took to social media to dispel the notion it was not longer in the running, saying in a tweet: "We may be slowing down, but we are not out of the race just yet".
"Lampert has a legacy to think about, and to walk away and acknowledge he made mistakes must be really tough".