Toys R Us is preparing to close around a quarter of its 106 UK stores, with the loss of hundreds of jobs, the BBC understands.
The closures would form part of a deal to renegotiate debts owed by the company to its landlords – which must be agreed by 75% of its creditors.
The toy giant, which has around 3,000 workers, is looking to move away from its “big-box” out-of-town store model.
Christmas trading and gift cards are not expected to be affected.
The company is seeking approval from its board and US parent company to enter talks with the landlords.
Specialist restructuring firm Alvarez and Marsal is understood to be drafting a company voluntary arrangement (CVA) on its behalf.
It hopes to strike a deal on Toys R Us’s debts which will allow it to continue trading without being pursued for the money it owes.
A Toys R Us spokesperson would not comment on the CVA proceedings, shop closures or job losses.
The CVA process is separate to bankruptcy protection proceedings involving Toys R Us’s US parent company, which were announced in September.