Toys 'R' Us prepares to liquidate operations: source

(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 [TOYUK.UL] 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