Restructuring company Hilco, which bought the DIY chain for £1 in May, confirmed it was planning a Company Voluntary Arrangement (CVA).
It bought the struggling chain from Australia’s Wesfarmers after its disastrous foray into the UK market.
The retailer, which has 241 stores, said the affected outlets would be shut over the next 16 months.
Damian McGloughlin, chief executive of Homebase, said it had been a difficult decision: “We need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs.”
A total of 17 Homebase stores have already shut this year, while 303 jobs at its head office in Milton Keynes have been cut.
A CVA is a controversial insolvency procedure used by struggling firms to close underperforming shops.
Restructuring experts at Alvarez & Marsal will carry out the CVA, which will require the support of landlords.
Property owners are left out of pocket by CVAs, although the British Property Federation (BPF) said that Alvarez & Marsal and Homebase had consulted with the landlords.
Stephanie Pollitt of the BPF said: “These situations are never easy, as property owners need to take into consideration the impact on their investors, including those protecting pensioners’ savings, as they vote on the CVA proposal.
“Ultimately, it will be for individual property owners to decide how they will vote on the CVA, but the proposal has sought to find a solution that provides a sustainable future for Homebase.”
Dave Gill of Usdaw, a union representing Homebase staff, said he was seeking urgent clarification from Hilco about its plans.
“All too often, staff are excluded from the CVA process as the future of their jobs are being decided,” he said.
“It is crucial that the company listens to the staff and invests in their experience and expertise to turn the business around and again make it a success.”
However, the Australian company admitted making a number of “self-induced” blunders, including underestimating winter demand for items such as heaters, as well as dropping popular kitchen and bathroom ranges.
Catherine Shuttleworth of retail consultancy Savvy said Homebase was a business “under attack from all sides”, with alienated customers finding “good alternatives in B&M, supermarkets’ own home sections, Wilko and others”.
She added: “This will go down in retail history as an example of needing to know the market – retailing is not necessarily globally portable. Chucking out the management was an ill-advised decision.”
George Charles, spokesperson for money-saving website www.VoucherCodesPro.co.uk, commented: “There have been talks for a while now that Homebase was next in line to close stores across the UK as the company found itself struggling in the current climate. Whilst they’re obviously doing what they need to do to keep the company afloat, and this is far less than the originally rumoured 80 stored and 30,000 jobs, it’s still not ideal for those who currently face notice that they no longer have a job.”