Mosaic Fashion, the owner of retailers Karen Millen and Oasis, is in crunch talks with lenders in a bid to secure long term finance for the chain.
According to The Sunday Times the business is to begin talks with lenders including Icelandic bank Kaupthing in an attempt to secure additional working capital.
The business has been hit over recent months by the withdrawal of credit insurance and nervous suppliers are demanding up front payments.
The company is not currently making any interest payments on its estimated £400 million debt which is being controlled by a government appointed committee running Kaupthing since the collapse of the Icelandic banks.
According to the report, if the retailer was to start making interest payments, its financial positioin would be impacted.
A debt-for-equity swap with potential suitors including Sir Philip Green and private equity group Alchemy is also thought to be an option for the business.
Kaupthing has a 20 per cent stake in the business.