Toys R Us, the iconic U.S. retailer, is in the process of drafting the court motion for its liquidation plan, a source familiar with the situation told CNBC on Tuesday.
Amazon and compete for the limited shelf space in big-box stores. As such, Wissink estimates as much as 15 percent of all toy sales could be lost for good.
Toys R Us entered bankruptcy in September with $4.9 billion in debt, a vestige from its $6.6 billion acquisition by Kohlberg Kravis Roberts, Bain Capital Partners and real estate investment trust Vornado Realty Trust in 2005.
Toys R Us had sold to those financial buyers amid pressure as Walmart, Target and others undercut its prices. The debt from that buyout, though, only added to its challenges. Retail soon dramatically changed, led by the rapid rise of Amazon, and Toys R Us found itself hamstrung by payments, unable to make the investments it needed to in order to keep up.
It had hoped under bankruptcy protection to finally make the changes it needed to compete — like a stronger internet business and more experiential stores — but, ultimately, it was too late. The crucial holiday season was dismal for the retailer, and it missed on all its financial estimates.
In the weeks that followed the holidays, pressure continued to mount. Its low cash balance left it at risk of breaching the terms of its bankruptcy loan, sources previously told CNBC. Another subset of of its lenders, meantime, have been pushing hard for liquidation, sources told CNBC.
Last week, it became increasingly clear that liquidation would be the most likely route. Still, as recently as last week, it was placing orders from its vendors and telling employees it was business as usual, sources said.
This week, though, Toy R Us missed a payment to some of its vendors, and was not responsive to calls, sources told CNBC. Bloomberg first reported the missed payment.
The people requested anonymity because the information is confidential. Toys R Us declined to comment.
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