Fears are growing for the future of House of Fraser after it emerged that the chain’s heavy borrowings scuppered an attempt to raise fresh financing.

The company is understood to have held talks with Alteri Investors, a turnaround firm, about a cash injection of around £40m. However, discussions collapsed because the department store group’s main assets have already been pledged as collateral against existing debts, The Sunday Times reported. It has £400m of loans, made up of bank debt and bonds.

The chain’s financial predicament will fuel speculation that House of Fraser could be the next high-profile retailer to run into trouble.

The industry has been hit by a flurry of casualties in recent days with Mothercare, Carpetright, Bargain Booze owner Conviviality, and New Look, all forced to seek help.