The department store chain, which employs 17,000 staff across 59 stores, is expected to launch a store closure plan next week.
But sources have told the Press Association the company is still drawing up emergency contingency plans in the case it has to enter administration.
House of Fraser is racing to secure £70 million in fresh funding through a proposed rescue plan but if this fails, it could file a notice to appoint administrators in days.
The firm is holding last-ditch talks with HSBC and the Industrial and Commercial Bank of China throughout this weekend after the lenders expressed concern about the department store chain’s bid to secure funding from a new investor.
The lenders, advised by EY, want assurances that Hamley’s owner C.banner will keep a promise of new funding when it takes a majority stake in the business.
The group has said it will pump cash into the business if the retailer accelerates a sweeping store closure programme via a Company Voluntary Agreement (CVA).
This allows companies to close loss-making shops and secure rental discounts.
But the move still encounter problems as the move would require approval from House of Fraser’s landlords, who have not been supportive of the CVA.
The firm has also been holding desperate talks with these landlords in a bid to get this approval as it fears they could vote against the CVA.
House of Fraser would need 75 percent of creditors to back the plan, and has also been seeking the approval of the Pensions Regulator.
If the CVA goes ahead, sources claim that around 20 stores could close as a result.
A House of Fraser spokesman said: “Constructive engagement continues between all parties.”
The UK high street continues to become a bloodbath as some of the country’s best-known retailers disappear or launch desperate survival plans.
Toys R Us disappeared in April with the closure of 100 stores and redundancies of more than 2,000 staff, while Maplin Electronics collapsed at the end of February, with sources claiming it will shut the last of its 219 stores in July.
Major chains including Marks & Spencer, New Look, Carphone Warehouse and Carpetright are all closing a number of stores in restructuring programmes as they try to adjust to the digital economy.
Earlier on Friday, Morthercare was given the green light by creditors and landlords to press ahead with a CVA that would see it close 50 underperforming stores but put 800 jobs at risk as a result.
The store closure programme is part of a wide-ranging restructuring plan that will also see the retailer, which empoys around 3,000 staff across 137 outlets, bag a refinancing package worth up to £113.5 million.
Mothercare’s interim Executive Chairman Clive Whiley said: “We are very grateful for the support of our many stakeholders across our creditor base in supporting today’s CVA proposals.
“Their forbearance and support today is a crucial step forward to achieve the renewed and stable financial structure for the business that will drive an acceleration of Mothercare’s transformation.”
A report from the Centre of Retail Research this week claimed that Britain’s high street will take such a battering that 382,000 retail jobs will be lost by 2022, while 61,000 stores had shut down since 2012.
It said this year will be the worst since the 2008 financial crash as 71,602 stores would have closed by the end of 2018.