Toys R Us could file for bankruptcy this week
It's just one of several options the chain is reportedly considering to pay down $5 billion in debt it owes as a result of a leveraged buyout in 2005, according to the Wall Street Journal.
The chain's trio of owners - private equity firms Kohlberg Kravis Roberts and Bain Capital Partners and real estate investors Vornado Realty Trust - bought the company in a deal worth $6.6 billion, taking it private.
A Chapter 11 bankruptcy would allow the company to restructure $400 million in debt that is due in 2018, then renegotiate the rest.
CNBC previously reported that the chain hired law firm Kirkland & Ellis LLP, that it was exploring options to take care of that debt, and is currently working with its creditors to stave off a Chapter 11 filing.
According to a new report by CNBC's Lauren Hirsch, the filing could come as soon as this week.
The debt crisis looms at a critical time for the toy seller. Toys R Us last year made 40% of its sales in the fourth quarter, thanks to the mad rush of holiday shopping. Vendors are feeling increasingly anxious about the chain's ability to pay down its debts, which could lead to a shortage of toys to stock its shelves and further exacerbating the issue.
Toys R Us has also struggled as its two main businesses, baby goods and toys, have moved online increasingly quickly in the last few years.
A Toys R Us spokesperson did not immediately respond to a request for comment.