By Jessica DiNapoli and Mike Spector

NEW YORK (Reuters) - Sears Holdings Corp Chairman Eddie Lampert submitted a revised roughly $5 billion takeover bid for the company on Wednesday, people familiar with the matter said, boosting the chances that the U.S. department store operator will escape liquidation.

In a concession, Lampert agreed to assume tax and vendor bills Sears has incurred since filing for bankruptcy protection in October, the sources said. The billionaire's revised bid was submitted through an affiliate of his hedge fund, ESL Investments Inc, on Wednesday afternoon along with a $120 million deposit, the sources added.

Lampert's previous bid, which Sears had rejected, was valued at $4.4 billion.

The new bid, which Sears will consider during a Jan. 14 bankruptcy auction, proposes assuming up to about $300 million of tax and merchandise expenses the 126-year-old company has racked up since its Oct. 15 bankruptcy filing, the sources said.

The offer, which aims to preserve up to 50,000 jobs, also would assume up to roughly $350 million in additional Sears bankruptcy expenses, severance benefits for employees and other liabilities, one of the sources added. Sears employed about 68,000 people when it filed for bankruptcy.

Ensuring Sears can pay its expenses, which include bills for legal and financial advisers and are known as administrative claims, was a main point of contention as the company negotiated the deal with Lampert.

Lampert's previous bid had proposed acquiring 425 Sears stores.

The sources asked not to be identified because the details of Lampert's new bid are not yet public.

Sears and ESL declined to comment.

Lampert's revised bid is the only one that envisions keeping Sears alive, albeit in a smaller form, and came after a last-minute deal he reached with the retailer on Tuesday as the company was preparing to liquidate. Other offers submitted over the past several weeks were for pieces of Sears or liquidation proposals to close its doors.

The breakthrough occurred hours before a scheduled bankruptcy court hearing on Tuesday. A Sears lawyer disclosed the agreement during the hearing, telling a judge it materialized after what he described as round-the-clock negotiations.

The agreement required Lampert to make a $120 million deposit, more than $17 million of which he will forfeit to Sears creditors unless his bid prevails in next week's bankruptcy auction.

Sears will now weigh Lampert's offer against a liquidation that would shut down the retail chain for good and put tens of thousands of people out of work. Sears has lined up a liquidator to sell off the chain's vast inventories of tools, appliances and store fixtures if necessary.