March 8 (Reuters) - Toys 'R' Us Inc is preparing for potential liquidation if its negotiations with creditors do not result in a deal that can help the struggling toy retailer to emerge from bankruptcy, a source familiar with the matter told Reuters on Thursday.
These talks are continuing and no decision has yet been taken. The company is also considering other options, including a potential sale in bankruptcy if possible, according to the source.
The company in January said it would shut about a fifth of its U.S. stores as it tries to emerge from one of the largest ever bankruptcies by a specialty retailer.
Toys R Us was hoping that strong sales during the key holiday season would boost its chances of clinching a deal with its creditors in bankruptcy.
Toys 'R' Us did not immediately respond to a request for comment.
The company has also struggled in Britain in recent years, resulting in Toys 'R' Us UK to go into administration, putting around 3,000 jobs at risk there.
The company is expected to report three-month earnings to the end of January later this month.
Bloomberg had earlier reported on Thursday that Toys 'R' Us was making preparations for a liquidation of its bankrupt U.S. operations. (Additional reporting by Ahmed Farhatha in Bengaluru; Editing by Shounak Dasgupta)