Sears Holdings Corp. won court approval Monday of a chapter 11 liquidation plan requiring suppliers that kept its shelves stocked in bankruptcy to wait for their money or take a discounted payoff.

Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., said he would sign off on a creditor repayment plan despite the company’s admission that it doesn’t have the cash to pay essential bills, including tens of millions of dollars owed to companies that supplied goods while Sears tried to stay afloat earlier this...