Debenhams has told billionaire Mike Ashley to agree a four-point plan to have any hope of achieving a last-gasp deal to take over the ailing department store group.

But as the retail tycoon on Sunday night accused the department store of “falsehoods and denials” – and suggested its board take lie-detector tests – the prospects for a tie-up are fading rapidly.

If a deal with Ashley’s Sports Direct is not hammered out it is likely that Debenhams’ creditors will on Monday night put the group into “pre-pack administration”, likely to result in the closure of 50 stores and the potential loss of thousands of jobs.

In such a deal, the 29% stake in Debenhams held by Ashley’s Sports Direct will become worthless.

On Friday, Ashley offered to underwrite a £150m rescue fundraising for Debenhams if the store chain agreed to make him chief executive.

But over the weekend, Debenhams set out four conditions that Ashley would have to meet before it would recommend that the store’s creditors extend their end-Monday deadline for a deal.

Those conditions include withdrawing calls for a shareholder meeting meant to oust the majority of the board, and guaranteeing that Ashley would follow through with his £150m cash injection if he is installed as chief executive.

The board also asked Ashley to agree to a joint press release with Debenhams and its lenders on Monday, and enter into a “stabilisation agreement” forcing him to avoid issuing any public statements that could harm the retailer.

But on Sunday afternoon Sports Direct issued a scathing statement against Debenhams accusing it of bad faith over a non-disclosure agreement, using language likely to put any deal at risk.

“For the avoidance of doubt, it is Sports Direct’s contention that the Board of Debenhams and its advisors have undertaken a sustained programme of falsehoods and denials. The fact that they can so openly lie in their recollection of joint meetings with Sports Direct is beyond the pale,” the company said.

Debenhams did not respond to the accusations.

Ashley said he and his colleagues took a lie detector test to “prove they were telling the truth,” adding that it did not expect Debenhams bosses would do the same “for fear of exposure”.

“We question how a business, particularly a public limited company, can operate in such a deceitful manner,” the statement said.

The Debenhams board is expected to make a decision within hours on whether to recommend creditors extend the Monday deadline.

But it would then be up to creditors – which include both banks and hedge funds – to decide whether to heed the board’s view. If creditors move ahead with a pre-pack administration, it would mean wiping out Ashley’s 29% stake along with those of other shareholders. Once under creditor ownership, the company would enter into a company voluntary agreement that could see 50 of its 165 stores close from 2020.

Ashley’s rescue offer set out on Friday would see him potentially gaining a majority stake in the company if other investors do not participate in his proposed rescue rights issue.

The billionaire, who bought House of Fraser out of administration last year, believes that together the two department store chains could be turned into a far better business.

Debenhams has been battered by tough high street trading conditions – higher costs and the effect of shoppers moving online – and simultaneously struggling with a huge debt pile.

The retailer has debts of £560m and is expected to lose £25m this year. Its shares have collapsed to only 2p – from 95p four years ago – and it is in urgent need of cash to keep trading.