Accept the nursery's offer to replace it. No point in beating yourself up over a plant that can be easily replaced.

One possible reason why it started to wilt in August could have been lack of sufficient water to its as yet underdeveloped root system.

Try to figure out what happened, and proceed forward with a new, healthy shrub.

Thank you. The offer was last August when this happened. Meanwhile I accepted a risk to treat it and don't know if the nursery would still do it. Although we watered our plants regularly, there was indeed an unexpected drought in our area last summer...

please see link on proper planting ... which includes planting in april .. not june ... the plant had little time.. to settle in before summer heat and drought ... watering should be deep and infrequent.. with near drying in between such ... insert finger to 3 inches.. and find out when it needs water ... no spraying the leaves ..

i never water my 15 year old Ls .. and in severe heat and drought.. they droop every afternoon .. and recover every night ...

presume your stock comes disease free .. i have grown Ls for 4 decades.. and never did anything to them other than water them the first year ...

do not spray it .. do not cut stuff off it ... on some level.. i fear you may have tried to love it to death ...

these are what i call .. run it over with the truck plants .... they simply shouldnt be problematic ... but for a large plant.. improperly planted ...

good luck ..

ken

https://sites.google.com/site/tnarboretum/Home/planting-a-tree-or-shrub

Thank you so much, ken_adrian. I truly hope it's our mismanaged watering issue than blight. We definitely violated your rule of thumb and alas watered it frequently but not thoroughly. The lesson learned...

The link for planting shrubs is most helpful, esp. for an eternal novice like myself :-) It says not to amend the soil too much, but we did it because the soil is a very hard clay and neglected for at least a couple of decades by the previous owners, so we don't have much choice but to amend it.

I have to say though that, when digging one of our raised beds for a new plant, I noticed dry patches from peat moss. We added peat moss and thoroughly mixed it into the planting soil because it's recommended for clay, but these dry patches are troubling and might have also formed around the root of our lilac. I don't think we'll use it again and instead search for some substitute.

reread the planting link on how to deal with clay.. it has nothing to do with adding peat moss ....

anyway.... Ls set their buds the fall before.. and most likely .. that was everything you cut off... because you panicked ... hence my comment that i would not have cut stuff off ....

ken

"When planting in clay or wet soils, roughen the edges of the planting hole with the tip or edge of your spade to reduce the interface/boundary often formed by compacted/glazed soil resulting from the digging tools pressing against the sides of the hole."

Yes, we did it, so it sounds the planting was done right.

A couple of stems that we didn't cut off are not budding at all. They look dry and dead. One of them can be seen on the last photo, no leaf buds, which makes me concerned that it was some fungal disease such as blight, but surely my mishandled watering had to be the problem as well.

ken_adrian, if you carefully read the OP's comment, peat moss was mentioned as an additional concern unrelated to your linked document. I also use peat moss for my clay soil. Now I wonder about the proper application to avoid the dry patches that the OP mentions.

vesfl, in my zone 8b/9a I can't grow lilacs and I can’t help you on this one. All the same, one would think if the branches that you cut off last year looked dead, then you did the right thing. were they dead?

Thank you, JBP. Yup, they looked dry and dead. Some were so brittle that they easily could have been snapped off. I consulted a few sources before deciding to cut them off and they all recommend removing the infected stems such as:

http://learningstore.uwex.edu/assets/pdfs/A2538.pdf

The leaves & stems looked exactly the same as the pictures showing lilac blight so I erred on the side of caution and followed their advice. The only two ones I didn't cut off still look dead now and my concern is that they carry the fungus. Now would be the time to reapply the copper fungicide according to this and a couple of other sources *if* it was the blight, hence my inquiry to the forum.

mad_gallica, I live in Western NY. It recently changed into the official zone 6a, but we locals still consider it 5b. Many thanks for your helpful comment about peat moss.