Bloomberg reported Toys “R” Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, according to people familiar with the matter.

While the situation is still fluid, a shutdown of the U.S. division has become increasingly likely in recent days, said the people, who asked not to be identified because the information is private. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, the people said.

The toy chain’s U.S. division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt. A new $3.1 billion loan was obtained to keep the stores open during the turnaround effort, but results worsened more than expected during the holidays, casting doubt on the chain’s viability.

“While a Chapter 11 bankruptcy provides a company with breathing space, it is incumbent on the debtors’ management to show how it intends to reorganize as a going concern,” said Gregory Plotko, a partner in the bankruptcy practice at Richards Kibbe & Orbe LLP. “My sense is that the major creditor group has not yet heard a compelling enough story, nor has a ‘white knight’ appeared.”

The situation has also deteriorated for many of the retailer’s overseas divisions, which weren’t part of the bankruptcy. Its UK unit put itself in the hands of a court administrator after discussions about selling the business fell apart. Its European arm is seeking takeover bids. And talks are being held to offload the Asian business, the company’s most profitable arm. It’s not yet clear what will happen to the Canadian unit, which filed at the same time as the U.S. division.

The news sent shares of the biggest toymakers tumbling in early trading Friday. Mattel Inc. fell as much as 7.6 percent, while Hasbro Inc. declined as much as 3.6 percent.

Toys “R” Us tweeted earlier today: “To our loyal customers: We’ve seen an amazing outpouring of love and support in recent days and we truly appreciate it. Our stores are open for business, ready to bring joy to children wherever we can, and to help new and expecting parents navigate raising a family.”

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