Toys R Us has officially filed for bankruptcy protection just days after suppliers began halting deliveries to the retailer.
The US-based retailer trades from 1600 stores worldwide employing 64,000 people.
Its key US and Canadian markets will fall under the Chapter 11 filing, but the retailer has stated its operations elsewhere – including the UK – would not.
It is as yet unclear what effect this will have on its 81 UK stores, but it will reportedly continue to operate “as usual” while the process of debt restructuring continues.
In recent years the retailer has amassed a $5.6 billion (£3.6 billion) debt bill.
In June it reported a quarterly net loss of $164 million (£121 million), its third consecutive quarter of losses.
Over half of this sum ($3 billion) has been secured by lenders in order to keep stores open during the holiday season.
This is crucial for the future of the retailer as 40 per cent of its sales are made in the fourth quarter.
“We are confident that we are taking the right steps to ensure that the iconic Toys R Us and Babies R Us brands live on for many generations,” chief executive Dave Brandon said.
“As the holiday season approaches, our global team members are ready to serve the millions of kids and families who will be shopping with us.”