The Andalusians are bottom of La Liga with only one win in 15 matches and have until February to present a plan of viability to the judge in charge of their insolvency proceedings, two of the club's three administrators said on Xerez's website.
"The financial situation is critical but in reality the way to get through this is to remain in the first division," administrator Antonio del Puerto Sanchez said.
"The resources available in the first division are nothing like those in the second and it will be easier to find a solution in the first."
Xerez were planning to ask creditors to forgive 30 percent of their debts if they managed to avoid relegation this season, or 50 percent if they went down, Del Puerto said.
They were also considering strengthening the squad in the January transfer period but any purchases would need judicial approval, he added.
Xerez have an annual budget of around 9 million euros, compared with the more than 400 million of La Liga giants Real Madrid and Barcelona.
Smaller clubs often suffer financial problems in Spain because television revenue is not shared out as in other European leagues like the English Premier League and Real and Barca take around half the TV income.
Potential buyers including Bernd Schuster, a former coach of Real and Xerez, have been linked in the Spanish media with possible bids for the Jerez-based club.
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