According to reports, a rescue deal could still emerge but is looking increasingly unlikely. 

Toys R Us is making preparations for a liquidation of its bankrupt US operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, according to industry insiders.

While the situation is still fluid, it is reported that a shutdown of the US division has become increasingly likely in recent days. 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, according to reports.

The toy chain’s US division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt. A new $3.1b 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.

The situation has also deteriorated for many of the retailer’s overseas divisions, which weren’t part of the bankruptcy. Toys R Us’s 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 growing 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 US division.

A representative for Wayne, New Jersey-based Toys R Us declined to comment on the matter.