Sears is alive — for now.

Hours before it was expected to liquidate, the 126-year-old retail icon has accepted a revised bid from chairman and former CEO Eddie Lampert in an effort to stave off liquidation.

The last-minute deal followed an extended hearing in the United States Bankruptcy Court for the Southern District of New York, where Judge Robert Drain gave Lampert a second chance to save the beleaguered retailer after his $4.4 billion buyout offer made at the end of December fell short of covering its fees.

Through his ESL Investments Inc. hedge fund, Lampert is expected to submit his revised proposal along with a $120 million deposit by Wednesday afternoon. It would allow operations to continue at 425 stores as well as potentially retain majority of the company’s 68,000 employees.

Following approval from the bankruptcy judge, ESL would be able to participate in an auction against liquidation bids on Jan. 14.

Once a dominant force in the retail industry, Sears Holdings Corp. filed for bankruptcy on Oct. 15. Over the last several years, ESL has loaned the company more than $2.4 billion in financing, with Lampert remaining Sears’ largest investor. The hedge fund is also the only party that has publicly offered to buy it as a whole, which would prevent the business from being broken up into pieces by liquidators.

Should it liquidate its remaining assets, Sears would join the wave of recent high-profile store closures, including Lord & Taylor, Saks Fifth Avenue and L Brands’ Henri Bendel. It announced late last year the shuttering of another 80 of its Sears and Kmart locations across the country in late March, with liquidation sales at the stores expected to begin in two weeks.

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