The bankruptcy judge overseeing the case said that means Lampert's use of a credit bid has not been pre-approved.
Lampert's offer did not include putting up cash to back the credit bid.
The reprieve came after what Sears lawyers described to a bankruptcy judge in NY as "round-the-clock" negotiations following the company board's initial rejection of Eddie Lampert's proposal, which sought to preserve 425 stores and 50,000 workers.
But the deadline passed without any word from Sears on the status of the bid.
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. 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.
There is a court hearing Tuesday morning in White Plains federal bankruptcy court, after which Sears is expected to announce whether it will liquidate, according to sources.
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"The bankruptcy process is burning through a lot of money and these assets are more valuable today rather than tomorrow", said a source close to the creditors.
Lampert entered the bid through Transform Holdco LLC, an affiliate of his private equity firm, ESL Investments Inc. 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.
He also offered to forgive more than $1 billion in debt he is owed by Sears from earlier loans he made to the company.
Sears dates back to the late 1880s and its mail-order catalogs.
While current Sears shareholders have lost almost all their investment and creditors that include the US government are owed $11 billion, Lampert has pocketed nearly $1.4 billion to date from his investment in the retailer, calculated Institutional Investor in a recent story.