US toy merchant, Toys 'R' Us is working on a loan to fund its operations in a potential bankruptcy filing that could come before the end of the holiday sales season, according to people familiar with the matter, Reuters reported.
According to commentators, the company's move comes as a pointer to the distress felt by retailers of all sizes as consumers increasingly shop online at sellers such as Amazon.com Inc or shop at discounters like Wal-Mart Stores Inc.
According to Reuters, the people could not be named as the bankruptcy plans are not yet public.
The Wall Street Journal had reported earlier that the company was considering filing for Chapter 11 protection in US Bankruptcy Court in Richmond, Virginia.
More than a dozen retail bankruptcies have been reported this year, but none of the retailers are in the Toys 'R' Us league. The company has about $5 billion in debt and over 1,600 stores worldwide.
If the company were to get a loan of several hundred million dollars as part of any possible bankruptcy filing, it would reassure the chain's vendors it could pay them for the loads of stuffed animals, action figures and dolls it needs to stock its shelves for the holiday season, according to the people.
Meanwhile, The Wall Street Journal reported that pressure from suppliers has intensified for Toys R Us and the company and its restructuring advisers are considering filing for Chapter 11 protection in the US Bankruptcy Court in Richmond, Virginia.
Toys R Us has hired lawyers at Kirkland & Ellis to help restructure the $400 million debt it will have to repay in 2018, according to the report.