Update 2: Lampert will be allowed to submit a new bid to save Sears, according to CNBC.

Sears on Tuesday had planned to tell the bankruptcy court it had rejected Lampert's offer to buy the retailer, after it fell short of covering its bankruptcy expenses. Lampert, though, protested the decision, highlighting the extensive costs of Sears' bankruptcy advisors, a person familiar with the situation told CNBC. Ultimately, the bankruptcy judge gave Lampert more time. ESL will be required to pay a $120 million deposit by 4:00 p.m Wednesday. Sears will hold an auction on Jan. 14. -CNBC

Update: Sears isn't going quietly - taking to social media to reassure the public that it's still around, and then deleting the tweets?

Via Reuters:

As the company and its bankruptcy advisers prepare for a possible liquidation, the retailer has taken to social media to reassure the public that it is still around. “We are down, but not out... - SMT,” Sears, via its official Twitter account (@Sears), said in reply to one of the many posts Monday morning about the 126-year-old company potentially going out of business. Another Twitter user opined that the retailer “had a good run I would say.” Sears replied: “We would say that as well, but we are Marathon Runners, and we are still running. We may be slowing down, but we are not out of the race just yet. Don’t count us completely out. Happy Shopping! -SMT”

It looks like someone got a tap on the shoulder at the "SMT" (Social Media Team), as those tweets are now gone from the @Sears account timeline.

***

Retail giant Sears will ask a US bankruptcy judge if it can proceed with liquidating its assets after a last-minute bid by Chairman Eddie Lampert failed, reports Reuters. A liquidation would affect approximately 68,000 employees and 425 stores.

The 126-year-old department store rejected Lampert's $4.6 billion package backed by Bank of America, Citigroup and the Royal Bank of Canada. The three institutions offered to provide a $950 million basset-backed loan and $350 million revolving line of credit to back Lampert's bid.

As we noted on Sunday, Lampert's financing package had gaps, and the plan would not have provided enough cash to cover bankruptcy-related costs. It also undervalued inventory and other assets compared to what liquidators were promising to pay. Part of Lampert's bid relied on the forgiveness of $1.3 billion of Sears debt held by his hedge fund, ESL Investments Inc.

The retailer started laying the groundwork for a liquidation after meetings Friday in which its advisers weighed the merits of a $4.4 billion bid by Lampert’s hedge fund to buy Sears as a going concern, said the people, who asked not to be identified because the discussions are private. If the 125-year-old retailer does die in bankruptcy -- like Toys “R” Us in 2018, and Borders Group Inc. in 2011 -- it would mark the largest fatality yet in the retail apocalypse prompted by a shift to online shopping. -Bloomberg