Sears has agreed to consider a revised takeover bid from billionaire Chairman Edward Lampert, temporarily staving off a liquidation that would have spelled the end of the 126-year-old US department-store chain.

Lampert's latest attempt to rescue Sears came after his previous $US4.4 billion ($A6.2 billion) bid fell short, prompting the retailer to make liquidation preparations ahead of a bankruptcy court hearing on Tuesday.

An attorney for Sears told US Bankruptcy Judge Robert Drain that Lampert is expected to submit a revised offer for the retailer, along with a $120 million deposit, by 4 pm local time on Wednesday.

Sears will weigh Lampert's offer against a proposed liquidation during a January 14 bankruptcy auction.

Lampert's bid, which recently envisioned keeping open 425 stores and preserving up to 50,000 jobs, still faces hurdles that could cause it to unravel in the coming days and prompt Sears to shut down for good.

The latest twist in Sears' months-long bankruptcy proceedings offers new hope that the teetering retailer could remain operational, albeit in smaller form, sparing the jobs of many of its 68,000 workers.

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.

In a stark contrast between e-commerce firms and many physical retailers, Amazon.com became the world's most valuable company for the first time this week.

Unsecured creditors, which include Sears landlords and bondholders, have pushed for the retailer to liquidate, partially because they contend they will realise a better financial recovery if it does.

Sears' bankruptcy, which includes discount chain Kmart, followed a decade of revenue declines, hundreds of store closures, and years of deals by Lampert to turn around the company he put together in 2005 through an $11 billion deal.

Sears, known for its mail-order catalogues, dates back to 1893. Merchandise from toys, medicine, gramophones, automobiles, kit houses and tombstones made it the Amazon of its time.

The iconic retailer gradually lost its shine, however, as consumers turned to e-commerce and brick-and-mortar rivals such as Walmart and Target.

Critics say Lampert let the stores deteriorate, even as he bought the company's stock and lent it money.

The largest US toy retailer, Toys 'R' Us, tried to emerge from its 2017 bankruptcy filing but was also forced to liquidate six months later, after creditors lost confidence in its turnaround plan.