Toys R Us has hired lawyers to explore restructuring options for its US business.
It has instructed firm Kirkland & Ellis to explore options including bankruptcy, raising financing and restructuring debt.
The toy retailer is also working with Lazard to explore options for its $5bn of debt, of which $400m is due to be re-paid next year. A large portion of its debt in the US is secured by real estate.
The retailer is owned by Kohlberg Kravis Roberts, Bain Capital Partners and Vornado Realty Trust.
It said in a statement that it would provide a further update on proceedings at its second quarter results, which are due on 26 September.
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