The label faces a spiralling cash crisis and is at risk of being bought up by its biggest lender, Citigroup, unless it can raise funds.
It hopes the unorthodox plan to effectively mortgage its North American catalogue business for five years could raise up to £400m.
The business is understood to be worth in the region of £100m a year, and could prove a lucrative investment for firms including Sony, Universal Music and Warner Music. Industry sources say the firms are tentatively interested but would like to lease the rights for a longer period.
Terra Firma boss Guy Hands is desperate to avoid the business falling into the hands of Citi, with which he is embroiled in a bitter dispute. He is suing the bank over claims it misled him in the lead-up to his acquisition of EMI. He says Citi did not inform him the only rival bidder had dropped out and rushed him into a deal, going against due diligence laws. The bank denies the charges.
Hands was believed to be on the brink of tapping investors, including the New York Fire Department, for a further £120m, a move that was considered unpalatable after the firm had already gone begging several times.
The plan to mortgage the back catalogue could also deflect a potential break-up bid being considered by private equity group KKR and Warner Music.