Sega is one of 20 companies in the running to purchase Japanese developer and publisher Atlus from parent company Index, according to a report.
Sources “familiar with the situation” have told Bloomberg Japan, as translated by Gematsu, that potential bidders who have expressed an interest will be narrowed down as soon as next week.
The winning bidder could be decided by the end of August.
Current bidding is said to have reached as high as 20 billion yen (£132 million), higher than the expected 15 million yen (£100 million).
Index, which filed for bankruptcy in June and is thought to have debts of around 24.5 billion yen (£162m) and is also facing allegations of fraud for allegedly inflating its annual revenues.
Last month it was announced the company would sell of its subsidiary operations to help pay off the debt.
Atlus , which became a wholly owned subsidiary of Index in 2006, is a Japanese game developer and publisher behind titles such as puzzle-platformer Catherine, the Person TV series and games, Dragon’s Crown and the upcoming Wii U title Shin Megami Tensei X Fire Emblem.