Kmart chairman Edward Lampert listens during a news conference to announce the merger of Kmart and Sears in New York . Kmart is acquiring Sears, one of the most venerable names in U.S. retailing, in a surprise $11 billion deal that will create the nation's third-largest retailerKMART SEARS MERGER, NEW YORK, USA

Edward S. Lampert may have made an offer Friday to buy Sears Holdings Corp. out of bankruptcy for $4.4 billion and keep 425 stores in operation, but the retailer is far from out of the woods — and it’s far from certain the hedge fund executive’s bid will succeed.

That’s because Lampert’s offer still needs to get “qualified” bid status, which won’t be known until Jan. 4. Lampert made good on a nonbonding offer disclosed earlier this month to acquire Sears’ assets, but needed to work out details with lenders, which have committed to $1.3 billion in financing. The final and official going-concern bid was made last Friday afternoon before the 4 p.m. deadline. The move gave Sears a bit of a reprieve from liquidation.

Lampert, through his hedge fund ESL Investments, in 2003 bailed Kmart Corp. out of bankruptcy and a year later engineered the merger of Kmart Holding Corp. with Sears, Roebuck & Co. While much was expected — and promised by Lampert — of the combined Sears Holdings entity, including annual sales projected at $55 billion, much has also shifted in the retail landscape in the years since the completion of the 2005 merger. Changes have included a preference for online shopping, as well as newer competitors who have captured the attention of consumers. Whether Lampert — whose tenure at the retailer has been filled with financial maneuverings and controversy even as he has dubbed the moves revolutionary in retailing — can save Kmart and Sears a second time, even if his offer is accepted, is questionable.

His bid Friday was made through the ESL affiliate Transform Holdco LLC and a Transform spokesman said of the offer, “Our bid reflects our firm belief that there is a future for Sears as a smaller, less indebted retailer and aligns with our long-standing goal over the past several years to help return the company to profitability. We continue to believe that Sears’ integrated and complementary businesses and brands can form the framework of a successful platform after emerging from bankruptcy.”

The spokesman noted the uncertainty of the outcome, stating: “Much work remains and there is no assurance our proposal will be completed, but we intend to work constructively with all relevant parties as this process moves forward. Our bid notwithstanding, we also will continue to assess the appropriate footprint for the company to ensure Sears is right-sized for future success.”

Lampert has a few hurdles ahead, mostly from creditor constituency groups. The unsecured creditors committee in the Sears bankruptcy is looking at past deals where the retailer sold assets, trying to do a deeper dive into the deals to see if they have any reason to try to get them undone. That’s even though there were independent advisers who did their due diligence and advised on the go-ahead before those transactions were completed. The committee has also complained that Lampert hasn’t put enough cash into the deal since he’s using $1.8 billion in debt that he holds as a credit bid. The effect here, if ultimately successful, is that Lampert gets to roll his debt into equity in the reorganized Sears. He is Sears’ largest creditor, as well as its largest shareholder.

Of course, the job of the committee is to look at where they might have a shot of grabbing more money to put back into the debtor’s estate so there’s a greater pool for funds to pay off unsecured creditors. And to no one’s surprise, the committee is objecting to the credit bid even though bankruptcy law has a provision that allows for credit bidding. So presuming Lampert’s bid does get qualified status, the future of Sears could be determined by Lampert himself.

Once he gets qualified status, his biggest competitors will be the liquidators. An auction is set for Jan. 14. They have been circling around Sears waiting to make their best offers to liquidate the different asset components of the retailer. Some creditors believe the different components are worth more than Sears sold as a single, ongoing concern. Sources said Gordon Brothers, Tiger Capital, Hilco and Great American are the liquidation firms keeping close tabs on Sears’ assets.

But the thing to keep in mind is that Lampert has an incentive to want to keep Sears. And at the end of the day, it’s really about how much more cash is he willing to put into a deal.

Sources said on Friday that ESL is expected to file with the Securities and Exchange Commission information about the structure of the $4.4 billion offer. The unsecured creditors committee will want to know if Lampert still insists on a release that would insulate him and ESL from any future legal claims the committee thinks it might have against them. They won’t be happy if the release requirement is still part of the offer, but it’s something that Lampert and ESL would likely keep in the offer. Since the matter could be resolved via settlement — think more cash — the question of where this goes is centered on how much higher would Lampert be willing to go on a better offer for Sears. That answer is unclear at the moment because it’s not just dependent on how much more the unsecured creditors committee thinks it can negotiate, but also the value of those liquidation bids. If those bids come in high, that could help the committee in their likely quest to push the ESL/Transform Holdco offer even higher.

As for Lampert, he’s got a another incentive to want to keep Sears in operation: When he created Seritage Growth Properties as a real estate investment trust “funded” via some of the real estate assets that had been owned by Sears, the Sears stores that operated at those locations became tenants and now pay rental income to the REIT. Lampert is also the largest shareholder of Seritage. If Sears goes out of business, Seritage would lose rental income and would need to find tenants for those sites. While that would not be catastrophic for the REIT, having Sears continue operating would mean fewer headaches in the near term.

And there’s one other question mark in the Sears bankruptcy. The big question is what will the bankruptcy court decide is the best offer — not necessarily the highest offer — for Sears. Whatever is the end result of the auction, the go-ahead is dependent on obtaining bankruptcy court approval. Keeping Sears in operation will allow for many Sears employees to keep their jobs. It will also mean keeping intact certain warranty agreements for consumers who have purchased big-ticket items, such as appliances and lawn tractors since the ESL affiliate has already said the offer includes keeping these protection agreements in place. While those two are not the overriding factors to be considered, they have a place in the determination of what is best for Sears. And while critics can argue that there’s no longer a need for either a Sears or Kmart nameplate on the retail landscape, the retailer still does about $10 billion to $12 billion in annual volume, combining merchandise sales and income from services. And keeping the stores alive will give vendors another retailer in which to sell their goods.

Sears filed its voluntary Chapter 11 petition for bankruptcy court protection on Oct. 15 in White Plains, N.Y.