The group, which runs the Topshop, Dorothy Perkins and Burton brands, is expected to appoint administrators for Deloitte in the coming days.
Sky News reported on Friday that Arcadia could tumble into administration as soon as Monday.
The retail group had been in emergency talks with lenders in a bid to secure a £30 million loan to help shore up its finances.
If the insolvency is confirmed, it is expected to trigger a scramble among creditors to get control of company assets.
It is the latest retailer to have been hammered by the closure of stores in the face of coronavirus, with rivals including Debenhams, Edinburgh Woollen Mill Group and Oasis Warehouse all sliding into insolvency since the pandemic struck in March.
The group has more than 500 retail stores across the UK, with the majority of these currently shut as a result of England’s second national lockdown, which will end next week.
The company said it is “working on a number of contingency options,” amid reports that Deloitte might soon be appointed as administrators.
A spokesperson for the company said: “We are aware of the recent media speculation surrounding the future of Arcadia.
“The forced closure of our stores for sustained periods as a result of the Covid-19 pandemic has had a material impact on trading across our businesses.
“As a result, the Arcadia boards have been working on a number of contingency options to secure the future of the group’s brands.
“The brands continue to trade and our stores will be opening again in England and ROI as soon as the Government Covid-19 restrictions are lifted next week.”
Dave Gill, National Officer at retail union Usdaw, said: “This is a devastating blow for workers at Arcadia and could not have come at a worse time, just before Christmas.
“We are seeking urgent meetings with management and we urge them to end their longstanding anti-union stance and engage with us.
“In the meantime we are providing our members with the support and advice they need at this difficult time.”