Unizo triggered Japan's largest bankruptcy this year, when the chain, which was partly owned by U.S. investment fund Lone Star, filed in April for bankruptcy protection, with debt of 126 billion yen ($932.99 million).

It had chosen a Japanese private equity firm, Nippon Sangyo Suishin Kiko (NSSK), as its sponsor, but will start a new bidding process at the end of this month, a group of lawyers representing Unizo said in a statement.

"Creditors had requested to start a new process to choose a sponsor," it said on Thursday. "There was high interest in this company since right after the company filed for a bankruptcy."

The decision, which comes after some debt holders had voiced concerns about the bankruptcy process, followed talks with NSSK, which is not excluded from the bidding.

In 2020 control of Unizo went to a fund created by Dallas-based Lone Star in a 250 billion yen deal after a nine-month bidding war among global investors such as Blackstone Inc and Fortress Investment Group.

Unizo's lawyers were not available for comment. Unizo did not return telephone calls from Reuters to seek comment. NSSK was not immediately available for comment.

($1=135.0500 yen)

(Reporting by Junko Fujita; Editing by Clarence Fernandez)

By Junko Fujita