"Bavaria will provide the biggest part of the guarantee, because most of Quelle's jobs are in Bavaria," a spokesman for regional authorities told AFP.
A total of €50 million in public guarantees, to be be shared by the federal government and German states, is being considered to allow Quelle to continue operating, a statement from the Bavarian regional government said.
The company is under pressure as the deadline for printing its winter catalogue nears. German banks were expected to draw up plans on Friday to ensure financing for Quelle's operations.
Arcandor declared insolvency on June 9 after it failed to obtain €650 million in state loan guarantees and €437 million in emergency loans from the federal government.
Officials in Berlin feel that Arcandor, which owns the Karstadt department store chain and a majority share in the British tourism group Thomas Cook, was in difficulty before a global economic crisis struck in mid 2008. Arcandor therefore did not qualify for public aid approved for German companies affected by the crisis.