The reports from individuals close to the company come as Toys R Us has failed to find a buyer as it makes plans to restructure its debt.
Media reports say that Toys R Us could close all 880 of its USA stores after failing to find a buyer or reach an agreement with its creditors.
Toys "R" Us filed for bankruptcy in September and has been closing stores to try to cut costs.
The longer the stores stay open, the more rent Toys R Us will owe to its landlords.
The retailer's attorneys echoed the message in bankruptcy in court, saying in essence that the world needed Toys R Us as the last remaining toy showroom.
That became apparent on Monday when the stocks of two of the world's biggest toy makers tumbled in USA trading.
Toys "R" Us has over 1,600 stores worldwide, which are also at risk.
Reuters reported that the retailer will liquidate its operations if its negotiations with creditors do not result in a deal that can help the company get out of bankruptcy. The retailer devotes so much of its space to toys - rather than the few aisles at Walmart and Target Corp. - it can take chances on new items and smaller suppliers.
Toys R Us faced the same problems that have pushed other retail chains into bankruptcy.
Citing a source who asked not to be named, Bloomberg reported that the search for a buyer for the company had not been successful. The closings present a larger problem for the toy industry as a whole as word of an impending liquidation sent stocks tumbling.
Toys R Us started in 1948 as a baby-furniture store in Washington, D.C. Nine years later, founder Charles P. Lazarus switched the store's focus to toys and shifted operations to Rockville, Md. In January it closed 180 locations.