Sears rejects bailout bid, hundreds of stores likely to close

New York City. If the bankrupt retail chain does not accept the only bid to save it it could be forced to start the process of shutting down as soon

As Sears inches closer toward dissolution - the embattled retailer just barely avoided liquidation plans on Tuesday - billionaire investor Warren Buffett also comes even closer to a prediction he made more than a decade ago. Lampert, though, protested the decision, highlighting the extensive costs of Sears' bankruptcy advisors, a person familiar with the situation told CNBC. Eastern on January 9.

The development offers new hope that Sears could remain operational, albeit in smaller form, sparing the jobs of many of its 68,000 workers. The 126-year-old company, whose closure would be among the most high-profile retail bankruptcies in recent years, struggled to convince suppliers to keep shipping it merchandise by touting the $300 million in financing it has secured in November so that its business could operate through the holidays.

Lampert entered the bid through Transform Holdco LLC, an affiliate of his private equity firm, ESL Investments Inc. Lampert's last offer was funded by conversion of debt to equity. Those made him the company's biggest creditor, in addition to its largest shareholder. 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.

Many of Sears' major creditors have said they want the company to liquidate. The creditors' attorneys question whether the terms of those loans unduly benefited Lampert and his hedge fund rather than Sears.

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A hearing in the case is scheduled for Tuesday.

Sears dates back to the late 1880s and its mail-order catalogs.

Even though no other bidders stepped forward, Sears Holdings' board decided the offer wasn't good enough since almost a quarter of it was in the form of debt forgiveness.

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 NY, according to a person with knowledge of the matter.

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