Private healthcare operator Bupa is trying to find new accommodation for 61 residents of the Pentland Hill Nursing Home, in Edinburgh, after saying it would close the facility.
However, Edinburgh City Council said it hoped to take over the home.
Bupa said although it had been making improvements after inspections the main reason it could not meet targets was because of a national shortage of care staff.
The Care Inspectorate watchdog raised concerns last year after claims of "horrendous" standards and a Police Scotland investigation was launched after four residents died within three months. It is not clear at this stage whether individuals or Bupa would face any charges. A report has been submitted to the Crown Office and Procurator Fiscal Service.