The Care Inspectorate - the independent body which scrutinises care services - is formally proposing to cancel the registration of Clachnaharry Care Home in Inverness, home to 17 residents.
Clachnaharry's owners, RDS Healthcare Limited of Harrow, Middlesex, now have two weeks to ask the Care Inspectorate to review its decision.
Another home owned by the company in Dingwall was criticised by a sheriff last year after an 87-year-old woman died in 2009 with bed sores.
Inspectors visited the 35-bed Clachnaharry home in May and found the quality of staffing, care and support and management leadership were all weak.
In particular there was concern about cleanliness and hygiene, as well as the experience and training of staff recruited.
During their visit the inspectors noticed some medication was missing from the home and found one of the medicine cupboards on the ground floor was not secure.
In some of the bathrooms the report revealed "shower heads were noted to be rusty and shower enclosures mouldy with broken edges" while there were parts of the home where "the floors were unsafe due to broken floor boards which were causing holes in the floor".
While the quality of staffing was graded as being adequate, inspectors said in May that "staffing levels in the home were not always sufficient to meet the needs of the service users".
Staff morale was also said to be very low at the time.
A notice requiring specific improvements was issued last month warning the owners they had to be able to demonstrate sufficient progress by September 30.
The notice required seven areas to be addressed. One was that it had to be demonstrated that the manager was a person of "integrity and good character" and had the "skills knowledge and experience necessary for managing the care service."
A spokesman for the Care Inspectorate said: "We have significant concerns about the quality of care offered to elderly and vulnerable residents at Clachnaharry."
RDS Healthcare was contacted for a comment but did not respond. An NHS Highland spokesman said: "We have been working closely with the families and the Care Inspectorate to look after the wellbeing of residents."