By Tracy Rucinski and Jessica DiNapoli

(Reuters) - A bankruptcy judge on Monday approved $300 million in financing to keep department store chain Sears Holdings Corp open through the holiday season, giving the century-old retailer that once dominated U.S. shopping malls a chance to remain in business.

Sears filed for Chapter 11 bankruptcy protection in White Plains, New York earlier on Monday with a plan to close about 142 of its 700 stores by year-end and sell its best-performing stores in an auction in January to a buyer that will keep them operational.

The bankruptcy filing by the parent of Sears, Roebuck and Co and Kmart Corp follows a decade of revenue declines, hundreds of store closures, and years of deals by billionaire Eddie Lampert in an attempt to turn around the company he acquired in 2005 for $11 billion.

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Lampert, who stepped down as Sears CEO on Monday but will remain chairman, had pledged to restore Sears to its glory days, when it owned the tallest building in the world and companies that included a radio station and Allstate insurance.

But the company, which has close to 70,000 employees, has not turned a profit since 2011, and critics say Lampert let the stores deteriorate over the years, even as he bought the company's stock and lent it money, making him its largest shareholder and creditor.

"For somebody of my generation, Sears Roebuck was a big deal... Sears has been dying for many years, it has been obviously improperly run for many years, and it's a shame," U.S. President Donald Trump told reporters on Monday. U.S. Treasury Secretary Steven Mnuchin was on Sears' board of directors between 2005 and 2016.

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Lampert and his hedge fund ESL Investments Inc own just under of 50 percent of Sears' shares and are its biggest creditor, with about $2.5 billion owed to him and ESL. He has so far not disclosed whether he has turned a profit or loss since he invested in Sears following years of complex financial engineering at the company.

NEGOTIATING BANKRUPTCY FINANCING

Beyond the $300 million bankruptcy financing package from its existing lenders that Sears secured on Monday, the retailer said it was negotiating an additional $300 million in bankruptcy financing from Lampert's ESL.

Sears listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the U.S. Bankruptcy Court in the Southern District of New York. Its debt to Pension Benefit Guaranty Corp, a U.S. government agency overseeing the retirement benefits of former Sears workers, was not disclosed in the bankruptcy filing.

Under the bankruptcy plan, Lampert's executive role will be replaced by a three-person committee. Mohsin Meghji, a managing director of the M-III Partners corporate advisory firm, was appointed chief restructuring officer.

Sears had earlier announced the separate closing of 46 unprofitable stores, and said Monday that is expected to be completed next month.

Sears is also weighing the sale of "a large portion" of its stores and said they could be bought by Lampert's hedge fund in a bankruptcy auction.

In bankruptcy court on Monday, Andy Dietderich, an attorney for Sears investor Bruce Berkowitz, formerly a member of the retailer’s board of directors, expressed concern that Lampert would have too much control over the bankruptcy process.

"Most of the company is gone," Dietderich said.

Shareholders generally lose all or most of their investment when a company files for bankruptcy, and the ability of Sears to escape liquidation will depend on the willingness of creditors and suppliers to keep the company afloat. Strong sales in the upcoming holiday season will be key in determining that.

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

STORE CLOSURES, ASSET SALES

Major Sears suppliers, such as Whirlpool Corp and Electrolux AB, sought to allay fears about their exposure to the bankrupt retailer. Whirlpool said Sears' bankruptcy will have a limited impact on its business, while Electrolux said it did not assess a need for material one-time costs as an immediate consequence of Sears' debt restructuring.

Meanwhile, Sears and Kmart stores are open for business. The company said it is continuing to pay employees' wages and benefits and is working with vendors to ensure its shelves remain stocked.

"The company believes that a successful reorganization will save the company and the jobs of tens of thousands of store associates," Sears said in a statement.

Shares in Illinois-based Sears closed at about 41 cents on Friday, down from over $100 in the years after hedge-fund star Lampert, once hailed as another Warren Buffett, merged it with discount store Kmart in a $11-billion deal in 2005.

Sears dates back to the late 1880s. Its mail-order catalogues with merchandise from toys, medicine and gramophones to automobiles, kit houses and tombstones made it the Amazon.com Inc of its time.

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

"It’s a sad thing that they are going bankrupt. But they didn't run it quite well, and that’s the consequence of not running something right," said 61-year-old retiree Paul Thompson, a Kmart customer at one of its stores in Bridgehampton, New York.

LAMPERT'S INVESTMENTS

One of the lingering questions for investors has revolved around the value of Sears' assets, which include prime real estate.

The company sold 235 of its best stores for $2.7 billion to a Lampert-created company, Seritage Growth Properties. Lampert also became Land's End Inc's biggest shareholder when the clothing manufacturer was spun out of Sears in 2014.

Those deals could be subjected to new scrutiny by Sears' creditors in bankruptcy court.

"When you go into a bankruptcy, you're living in a fish bowl and every transaction will be looked at and examined," said Corali Lopez-Castro, Managing Partner at law firm Kozyak Tropin & Throckmorton.

In an earlier attempt to avoid bankruptcy, Sears last year sold its Craftsman tool brand to power tool maker Stanley Black & Decker for $900 million. It also signed a deal to sell Kenmore appliances on Amazon.com.

Over the summer, a special board committee Sears created was resisting a rescue offer from Lampert to acquire assets from it, including its Kenmore appliance name.

(Reporting by Tracy Rucinski in Chicago and Jessica DiNapoli in White Plains, New York; Additional reporting by Tom Hals in Wilmington, Delaware Melissa Fares in Bridgehampton, New York, and Rama Venkat in Bengaluru; Editing by Louise Heavens and Nick Zieminski)