Sears Holdings has rejected Chairman Eddie Lampert’s bid to save the 126-year-old company, setting the storied retailer with more than 50,000 employees on a path to liquidation, people familiar with the situation told CNBC on Tuesday. Sears, which also owns Kmart, planned to announce its liquidation plans Tuesday morning, the people said.

Lampert had put forward a $4.4 billion bid to save Sears by buying it out of bankruptcy through his hedge fund ESL Investments. His offer, though, was deemed insufficient by Sears’ advisers, the people said. One of the biggest unresolved issues was covering the fees and vendor payment it owes, making it “administratively insolvent.”

Still, ESL plans to protest Sears’ decision, a person familiar with the situation told CNBC. ESL, which worked over the weekend to improve its offer, will point to the extensive advisory fees that Sears has racked up during bankruptcy. Such fees are part of Sears’ administrative expenses.

The people requested anonymity because the information is confidential.

A liquidation could still salvage pieces of the storied retailer, like its home services business. Still, it marks the end of an era for the company that started in 1893 as Sears, Roebuck & Co., and was once the nation’s largest retailer. Its fall from grace saw it swing from being the “first everything store” to a business that couldn’t compete when “everything” was found online after Amazon arrived.

It will be what many deem the ultimate proof of failure in Lampert’s grand plan to fortify two struggling retailers, Sears and Kmart, by combining them in 2005. The combined companies became victim of savvier competition, changing shopping habits and, many have argued, poor management.

Lampert’s background as a hedge fund manager, once deemed the next Warren Buffett, proved to be poor preparation for battling retail titans like Walmart, Target and Amazon. Lampert believed that a strong loyalty program and data made investing in stores and advertising optional, people familiar with the situation have said. As Sears’ losses piled up, it didn’t have a choice, it couldn’t invest.

Sears’ last profitable year was in 2010. Sears had a little under 700 stores when it filed for bankruptcy in October, but it has since whittled that down to an expected footprint of roughly 400. It employed 68,000 workers at the time of its filing.

ESL declined to comment. Sears did not immediately respond to requests for comment.