Toys R Us has missed payments to suppliers lately, sources say

Toys R Us Inc. has missed payments to some suppliers in recent days as the U.S. division heads toward a likely liquidation, according to people with knowledge of the situation.

The retailer, which filed for bankruptcy protection in September, has stopped making the payments without providing an explanation, said the people, who asked not to be identified because the matter is private. Some of the people said they can’t get anyone at Toys R Us to respond to questions.

The company, which faces a $5-billion debt load, also recently stopped negotiating settlements with vendors on money owned before it filed for bankruptcy, some of the people said.

Toys R Us liquidation would leave a giant hole in the toy industry »

A representative for the Wayne, N.J., company declined to comment.

The bleak situation lends evidence to the notion that Toys R Us is moving toward winding down its U.S. operations for good. Bloomberg reported last week that the retailer was preparing for a liquidation of its U.S. business.

The company has failed to find a buyer or reach a debt restructuring deal with lenders, leaving it with few options, people familiar with the situation said at the time. A hearing in Bankruptcy Court is scheduled to be held Thursday, after being delayed.

The struggles of Toys R Us have taken a toll on the two largest toymakers, Hasbro Inc. and Mattel Inc. Shares of those companies fell last Friday after Bloomberg reported about the possible liquidation, then lost ground again Tuesday over concerns about missed vendor payments.

Hasbro fell less than 1% to $89.73 as of 2:47 p.m. Eastern Time, and Mattel dropped 3% to $14.54.