Sky News has learnt that Safestyle is working with Interpath Advisory to explore strategic options including a refinancing or outright sale.

City sources said potential buyers have been sounded out in recent days about the process.

Safestyle has a tiny market capitalisation of less than £4m, implying that any sale would deliver little value for shareholders.

The company has already warned the City of its financial challenges, telling investors earlier this month that it has "been engaging with its stakeholders to discuss ways to strengthen the balance sheet in order to support its recovery and help facilitate future growth".

"As part of these discussions, the group has also engaged with a number of third parties who have expressed interest in investing in the group," it added.

The identity of Safestyle's suitors was unclear on Tuesday.

One analyst said a working capital injection of some kind was likely to be required in the near term if the company was to remain solvent.

In its stock exchange announcement this month, it also said that it was likely to breach banking covenants if forecast losses materialise.

"Looking further ahead, the board maintains that growth recovery prospects are strong and data of an ageing housing stock in need of repair underpins this," the company said.

Safestyle declined to comment on Interpath's involvement.