Toys R Us prepares to file liquidation plan with the court

Toys R Us prepares to file liquidation plan with the court

Toys R Us, the iconic U.S. retailer, is in the process of drafting the court motion for its liquidation plan, a source familiar with the situation told CNBC on Tuesday.

The retailer could file as soon as the end of Wednesday, making the motion official. This step begins the wind down of the storied toy retailer, after more than half a century in business.

The retailer this week missed a payment to some of its vendors, two people familiar with the situation said.

The retailer has not been responsive to calls from its vendors, they added. Bloomberg first reported the missed payment.

Toys R Us declined to comment.

The retailer was battered by dismal holiday season, in which sales, traffic and profit all fell far short of what it had told lenders to expect. Poor holiday performance, as well as a group of lenders that have been pushing for liquidation, have challenged the retailer’s ability to emerge from bankruptcy.

The retailer filed for bankruptcy protection in September with $4.9 billion in debt.

Shares of toymaker Mattel closed down about 3.5 percent, while rival Hasbro shares were shed about 1 percent.

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