Under the proposal, Burton, Dorothy Perkins and Topshop stores will close and rents will be cut at another 194 stores at the Arcadia group.
However, the pensions regulator has doubts that the deal will "adequately protect" the pensions of employees.
The regulator's support is crucial in order for a Company Voluntary Arrangement (CVA) to be approved.
CVAs are a type of insolvency for troubled businesses that allows rents to be cut. There are seven in total and all must be approved by creditors.
The proposal states that Arcadia Group is prepared to put an additional £100m into the scheme over a number of years to bridge a shortfall in pension contributions, but the regulator does not think the plans are sufficient.
Ian Grabiner, chief executive of Arcadia Group, called the steps "tough but necessary" to mend the business.
The company also plans to shut all its 11 Topshop and Topman stores in the US.
Philip Green: what's gone wrong at his Topshop empire?
The closures would add to the 200 UK stores shut over the past three years as it struggles with a challenging market.
They are seen as a final effort by a company to stave off administration or breakup.
Many retail experts believe Topshop, Sir Philip's prize asset, has fallen out of favour with today's young consumers, who are favouring online retailers such as Asos and Pretty Little Thing.
It is another blow to the tycoon, who this month lost his Sunday Times Rich List billionaire status.
In return for the rent cuts, Sir Philip's wife, Lady Tina Green, who is the main shareholder of Arcadia, will invest £50m in the company.
Landlords, thought to number in the hundreds, and other creditors will have to agree to the proposal, which will be put to them on 5 June.
The deal will see them owning 20% of the firm, while they will also be able to claim against a £40m "compromised creditor" fund.
Read more here
