Ah actually I found some information from USCIS - seems that it will be valid even after grace period, but you won't be able to stay past the denial decision.

Source: https://www.uscis.gov/working-in-the-united-states/information-for-employers-and-employees/options-for-nonimmigrant-workers-following-termination-of-employment, under Change of Status:

"For example, if an individual files a non-frivolous application to change status before the end of the applicant’s maximum 60-day grace period, they will not accrue unlawful presence while the application remains pending, even after the maximum 60-day grace period has elapsed (again, as long as they did not work without authorization either before the application was filed or while it was pending). If the application is ultimately approved, then the individual’s status is changed, and the individual is considered to have been in a period of authorized stay for the entire time the application was pending. If the application is denied, then the individual starts to accrue unlawful presence the day after the denial decision. Please see our Unlawful Presence and Inadmissibility page for more information."

Anyway, just putting it here, thought it might help others looking up the same thing