With deadlines looming to pay off hundreds of millions in debt, Toys R Us has enlisted a law firm to look at its options which range from refinancing to possibly filing for bankruptcy protection.

The toy giant is working with attorneys at the firm Kirkland and Ellis to deal with $400 million in debt due by the end of this year, according to a source familiar with the matter. Half of its debt obligation is due this fall, with the remaining $200 million due to be paid back near the end of December.

Though one of several options, bankruptcy is definitely not off the table, says Neil Saunders, managing director of retail consultancy GlobalData.

"If they cannot reach sensible agreements with lenders or find ways of restructuring their debt, it is a very distinct possibility,'' he said. "It would also be helpful in giving Toys R Us some flexibility to exit leases and stores that they no longer want."

But such a move could be crippling heading into the all-important holiday season, a period when many retailers earn roughly half of their annual revenue, and the time of year that should be most lucrative for the iconic toy seller.

"Bankruptcy at this moment in time would be damaging,'' Saunders says. "It would make consumers nervous about buying bigger ticket items from the chain as the lucrative holiday period approaches."

Toys R Us noted the need to secure enough cash to make both payments in a call with investors in June.

"As we previously discussed on our first quarter earnings call, Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing,'' spokeswoman Amy Von Walter said in a statement, adding that the company will provide an update when it reports its second quarter earnings on September 26th.

Toys "R" Us has dealt with a heavy debt load since it became a private company in 2005. Its private equity investors, KKR, Bain Capital, and Vornado Realty Trust, initially planned to recoup their investment with a public stock offering within three years, but that plan fell through when the Great Recession hit.

The owners brought in a new chief executive, Dave Brandon, in 2015 to helm a turnaround that could set the company up for either another attempt to go public, or a sale. But the retailer has continued to struggle. Walmart is now the nation's largest toy seller, and shoppers can also pick up toys by browsing online giant Amazon, or seeking out other mass merchants.

Toys R Us had a particularly poor showing in the first quarter, that ended April 29, in the wake of sluggish sales of toys and baby products, coupled with steep discounts offered by its peers. The retailer saw a net loss of $164 million, vs. $126 million during the same period in 2016. And consolidated net sales declined by $113 million, to $2.2 billion.

The toy store chain's long-term debt was $5 billion as of April 29. It had $701 million in liquidity, which included $400 million in committed lines of credit.

In an earnings call with investors about those first quarter results, executives said that they had hired Lazard and were poring over the possibilities that were presented, "prioritizing them in terms of which ones we think are most attractive to the company.''

Toys R Us has acknowledged that it fell behind the digital curve at a time when more consumers are shopping online. It has invested nearly $100 million in its e-commerce operations in the last three years, and it recently revamped its website.

Contributing: Joan Verdon