Carpetright is looking to close stores as part of a turnaround plan.
The retailer said it is considering a company voluntary arrangement (CVA) that would let it shut unprofitable shops and slash rents.
It is unclear how many stores could be closed or if jobs are at risk.
Chief executive Wilf Walsh said the firm’s previous management had opened too many stores that were poorly located with “simply unsustainable” rents.
It comes amid a wider slowdown on the High Street, which has seen a host of big retailers shut stores or go bust.
Fashion retailer New Look, restaurant chains Jamie’s Italian and Prezzo, and burger chain Byron have all recently struck rescue deals.
If Carpetright’s CVA goes ahead, it would seek to raise raise up to £60m from investors to drive down its debt.
The firm, which has 409 UK shops, has also agreed a £12.5m emergency loan to relieve “short-term funding pressure”.
Mr Walsh said it would be “business as usual” for the flooring firm’s stores during Easter and it would remain in “close contact” with staff over its restructuring plans.
Carpetright shares initially rose on the news, but then fell back to trade 0.6% lower.
Neil Wilson, an analyst at ETX Capital, said: “This is very much the nuclear option but one that Carpetright has been forced to take… but it might just have found its compass to navigate its way out of trouble.
“As long as the CVA can be agreed, it should free the company up to make some aggressive restructuring.”
On Wednesday, baby goods retailer Mothercare reached a deal with its lenders to stop it breaching the terms of its loans.
The firm faces challenging trading conditions and is cutting its store numbers from 140 to 80.
Experts say retailers are struggling with higher overheads, weaker consumer confidence and more online spending.
Many also embarked on debt-fuelled expansions during the good years, leaving them dangerously exposed.