More details have emerged of the terms facing potential bidders.

It is understood that any potential buyer of the Toys R Us UK operation would have to provide around £50m immediately to pay off the consortium of bank lenders that have provided financing to its US parent company.

According to The Sunday Telegraph, sources who have seen proposals suggest that the retailer is also seeking around £70m in the first year to fund a major overhaul of its store estate and more competitive pricing.

Toys R Us has allegedly told potential buyers it could also cut around 20% of staff from central overheads and reduce stock ranges by 10% to further bring down costs. As well as shutting stores, Toys R Us also wants to reduce the floorspace of its 79 remaining stores by more than a third and secure rent reductions.

It then plans to open more than 30 new small Express stores in unserved regions and invest more in its online shopping capabilities.

Turnaround specialists are said to have been scrutinising the accounts of Toys R Us over the weekend to decide whether to enter the bidding process.

One financier allegedly told The Sunday Telegraph that his company had ruled out making an offer because of the high upfront cost of the plans and the high level of competition in the toy retail market.

In other news, regulators are also said to be monitoring Toys R Us amid fears its pension deficit could be jettisoned into the Pension Protection Fund.

Documents referred to by The Mail on Sunday quote debts of £239m, including a £74.3m pension deficit as calculated by the Pension Protection Fund, which is likely to have to pick up the pieces if the company fails.

Other key debtors included Lego and Hasbro, both owed more than £5m, and Mattel which was owed £3.5m.

The immediate funding requirement for the pension fund is understood to be around £30m, a bill which may ultimately have to be footed by pension savers via pension funds that plug holes in schemes run by failed companies, as restructuring firms considering bidding for Toys R Us may not volunteer to support the pension fund.

Toys R Us is understood to have contributed £1.1m into the pension scheme last month as part of a promise to contribute £10m a year.