Toys R Us UK could plunge into administration on Wednesday if the firm fails to pay a £15 million tax bill.
The Press Association understands administrator Moorfields is waiting in the wings as the toy seller attempts to find a buyer before hitting the payment deadline on a hefty VAT bill.
Toys R Us, which employs around 3,200 staff in the UK, is understood to have struggled with cash flow pressures after sales were squeezed by worse-than-expected trading over the crucial Christmas period.
It comes after the beleaguered firm announced a Company Voluntary Arrangement (CVA) at the end of last year in an attempt to shore up its financial position by allowing it to shut loss-making stores and secure deep discounts on rental costs.
The restructuring plan won the approval of 98% of creditors in December, and had the backing of the Pension Protection Fund (PPF).
The move would see at least 26 loss-making UK stores shut and spark the loss of up to 800 jobs.
The PPF had earlier refused to back the retailer’s plans, but concessions from the company, including an offer to reduce its deficit recovery plan to 10 years from 15 years, meant the deal received its blessing.
In total, Toys R Us has agreed to pay £9.8 million into the pension plan, made up of £3.8 million in 2018 and £6 million over 2019 and 2020.
Moorfields declined to comment.