Could the deal turn the lights back on at Daiei?
The company owes as much as 2,310bn yen (£12.1bn; $17.4bn), and without a bailout it is certain to join an increasing number of Japanese companies in the bankruptcy courts.
Other retailers facing difficulty have included Mycal, formerly Japan's fourth largest supermarket chain, which in September filed for court protection from creditors with debts of 1,700bn yen.
If Daiei's plan is accepted, and succeeds in fostering the firm's revival, it could prove a shot in the arm for the whole Japanese economy, analysts said.
The fact that Daiei's general merchandising stores are still generating healthy revenues is encouraging, they said.
One of the main factors fuelling the vicious cycle of deflation and recession in Japan are the bad debts, dating back to the boom years of the 1980s owed by companies such as Daiei to banks.
But observers believe a failure by Daiei to grasp the opportunity for root-and-branch reform could undermine confidence in Japan's chances of recovery, already badly damaged by years of corporate and governmental inertia.
Debt for equity
While few details of the revival plan are yet available, it is reported to involve a combination of write-offs and swaps of debt for Daiei shares.
The firm is, over a timescale of three years, hoping to win 300bn yen from its main three creditor banks - UFJ Holdings, Sumitomo Mitsui Banking and Fuji Bank - in debt for yen swaps and debt forgiveness.
The retailer also hopes the banks will also write off 120bn yen in Daiei preference shares bought last year.
Daiei itself will cut about 5,000 of 32,000 jobs and close 50 stores as part of the scheme, aimed at cutting its debt to just 1,000bn yen by 2005.
This figure does not include 500bn yen owed by the firm's consumer credit arm, Daiei OMC.
Daiei said it was aiming to record a profit of 30bn yen for the year ending March 2005.
The company also wants investors to allow it to halve the number of shares issued.
The firm has not opened negotiations over its hold over the Fukuoka Daiei Hawks, a baseball team which the company has run for years, although the stadium and a hotel nearby are up for sale.
Stock boost
News that Daiei would announce its plans once the Tokyo stock market closed helped its shares rise 31% to 165 yen by the close of trading on Friday.
Among Daiei's creditors, shares in UFJ dropped 1.6% to 298,000 yen.
Mizuho shares also fell, slipping 2.3% to 292,000 yen, but stock in Sumitomo Mitsui inched up 0.5% to 555 yen.