The firm, which has 1,600 stores across the globe, is struggling to cope with the shift to shopping online, according to claims by the Wall Street Journal and Reuters.
The toy company has not commented on claims that it is preparing for a potential bankruptcy filing before Christmas.
Sources close to the retailer have told both news outlets that Toys ‘R’ Us could make the move in the next few weeks after its suppliers tightened terms ahead of the crucial festive season.
The Wall Street Journal stated that the company was considering filing for Chapter 11 protection in the US Bankruptcy Court.
In these circumstances, a company proposes a plan of reorganisation to keep its businesses alive and pay its creditors over time.
It is not known if the move would have any impact on the firm's UK branches, including outlets in the Frenchgate Centre and Lakeside Village.
According to the report, Toys ‘R’ Us has around $5 billion (Â£3.6 billion) worth of debts.