The new owners of Homebase will reveal plans to close 60 of its stores next week, which could threaten up to 1,500 jobs.
Restructuring company Hillco, which bought the DIY chain for ¬£1 in May, will outline plans for a rescue deal next week, Sky News reported.
Hillco bought the struggling chain from Australian firm Wesfarmers after its disastrous foray into the UK market.
Homebase has about 250 stores and 11,500 employees.
Hillco is to propose an insolvency mechanism known as a Company Voluntary Arrangement (CVA) early next week.
A number of retailers have used CVAs as a step short of going into administration, including House of Fraser and Mothercare.
Wesfarmers bought Homebase in 2016 and set about redeveloping Homebase stores under its Bunnings brand.
But the Australian firm admitted making a number of “self-induced” blunders, including underestimating winter demand for items such as heaters, as well as dropping popular kitchen and bathroom ranges.