Debenhams is to seek £200 million in new financing and pursue a restructuring plan in a move which could wipe out existing shareholders including Mike Ashley.
The department store chain has launched a consent solicitation for its lenders in a bid to secure up to £200 million, a higher amount than previously thought.
If successful, it will also embark on a restructuring in an effort to “secure the future of the business”.
Some options for this would result in no equity value for the company’s current shareholders.
Shares in the company dropped more than 60% to 1.05p in early trading on Friday.
Current shareholders include Sports Direct boss Mr Ashley, which owns just under 30% and has been trying to oust the Debenhams board and install himself in their place.
On Thursday, Mr Ashley reiterated his call for a shareholder vote on the proposal, which would see all directors except finance boss Rachel Osborne, kicked out.
He already ousted former chairman Sir Ian Cheshire from the company in January by teaming up with fellow shareholder Landmark to vote against his re-election.
Chief executive Sergio Bucher was also removed as a director but has remained in his post for the time being.
Mr Ashley had also offered Debenhams a loan, which it said would be considered.
Debenhams said last week that it was in talks with lenders to secure a new loan, part of which will pay down a bridging loan that it announced in February.