The Debenhams chairman has confirmed the ailing retailer will close stores but denied that the company is actively planning to do so through an insolvency process.

Sir Ian Cheshire’s comments come after weekend reports that Debenhams was working with advisory firm KPMG on a company voluntary arrangement (CVA), a form of insolvency that enables a business to exit unwanted properties and negotiate rent cuts across groups of stores.

Debenhams would would have been the 31st retail and restaurant chain to have launched a CVA since last year, as high street businesses wrangle with the switch to online shopping, combined with rising business rates and other costs.

Big high street names including Homebase, Mothercare, Carpetright, New Look and Jamie’s Italian have all used the process to downsize, while Multiyork, Toys R Us and Poundworld tried CVAs before going into administration.

Cheshire told BBC Radio 4’s Today programme it was “simply not true” that Debenhams was “actively working” on a CVA.

He said Debenhams had rushed out a trading statement on Monday in response to the media speculation.

Cheshire likened this to “nosy neighbours” who had seen someone in a suit entering their house, assumed he was an undertaker “and by end of day you’ve got cause of death and everyone’s looking forward to the funeral”.

However, he admitted that Debenhams was likely to have fewer stores in future and was “working through what’s appropriate” in terms of closures over the longer term. The retailer said last year that it would close up to 10 stores and has already shut two.

The likely closures come at a difficult time for department stores, with House of Fraser set to close at least 12 of its 59 stores after being rescued from administration by Sports Direct, while the owner of John Lewis has admitted that it will make almost no profit in the first half of this year.

Cheshire said that “capacity would leave the market” but insisted that Debenhams and the department store format in general was not dead as long as it continued to update itself for the 21st century.

“There will be winners and losers. There is room for a Selfridges of the high street that brings newness and fashion and beauty,” he said.

John Webber, head of business rates at property advisory firm Colliers, said Debenhams was battling against a surge in business rates, which had added significantly to costs at some of its key sites.

“Debenhams is seeing the negative impact of the 2017 rating revaluation, which we believe has substantially added to its costs,” he said.

Colliers calculates that the rateable value of the Debenhams store in the Westfield shopping centre in White City, west London, has soared 133% since the 2017 revaluation process, giving a rates bill of £1.3m, while rates at Debenhams’ Oxford Street site in central London have soared by nearly £2m to £5.36m.