Debenhams has said it will "give careful consideration" to Mike Ashley's Sports Direct offer of a £150m loan.
Sports Direct, 61% owned by Mr Ashley, confirmed on Wednesday it had offered a loan to Debenhams as part of a deal which would make him chief executive.
Earlier on Wednesday, Sports Direct complained to the Financial Conduct Authority (FCA) accusing the Debenhams board of misleading investors.
Debenhams rejected the complaint as "unfounded and self-serving".
The department store chain is in the process of arranging additional loans of £150m with lenders.
The alternative deal, proposed by Sports Direct, which applies "on or before 31 March 2019", includes a £150m loan.
However, in return, Sports Direct wants to be issued with about 5% of new shares and Mike Ashley be made a director and chief executive of Debenhams.
If the deal conditions were approved by shareholders, the £150m loan would be interest-free, Sports Direct said.
But if the conditions were not approved, the loan would bear 3% interest.
The department store chain said any such a loan would require the backing of current lenders and "material amendments" to existing facilities.
It added: "Nevertheless, the board will give careful consideration to the proposal and will engage with Sports Direct and other stakeholders regarding its feasibility in the interests of all parties."
Sports Direct, a major Debenhams shareholder, is trying to remove all but one of the board members.
Along with fellow major shareholder Landmark Group it has already ousted Debenhams chief executive Sergio Bucher and chairman Sir Ian Cheshire from the board.
Sir Ian stepped down, while Mr Bucher remains in post.
Sports Direct wants to appoint Mr Ashley to run Debenhams.
The sports retail chain complained in a letter that a Debenhams market update given before a profit warning in March was "at best impossibly optimistic or at worst deliberately misleading".
The letter questioned why the board had given a forecast on 10 January saying full year profits were set to hit analyst expectations of £8.2m, only to then give a profit warning eight weeks later.
The Sports Direct letter alleged that the update on 10 January was "quite clearly misleading" in saying "we continue to generate cash" given emergency funding of £40m was needed by Debenhams "a mere five weeks later".
Mr Bucher and Sir Ian were ousted from the board on 10 January.
Sports Direct also questioned the rate of return on the £40m loan from current debt holders.
Mike Ashley had offered to make a £40m loan in return for an extra 10% stake in the company, giving Sports Direct a controlling stake - it currently owns 28.7% of Debenhams.
The Sports Direct letter added: "The [Debenhams] board and chief executive have no place leading a PLC [public limited company] or in making public statements to the market."
Debenhams said in a statement: "We reject these unfounded and self-serving complaints.
"Debenhams' board has taken advice at every stage in order to ensure that its announcements have been consistent with the disclosure requirements.
"The company is seeking to execute a much-needed restructuring - in the interests of all stakeholders - while its biggest shareholder tries to undermine the process at every turn."