Toys R Us has lined up administrators as fears mount that the UK business will collapse early next week putting up to 3,200 jobs at risk.

The news that management are readying for insolvency comes after weeks of crunch talks with investors and potential buyers, with bosses of the retailer's UK arm attempting to secure a £120m lifeline to pay off lenders and overhaul operations.

Toys R Us had been hoping to implement a five-year plan using the funds, cutting staff and stock ranges, and shutting stores. It was asking potential buyers to make a £50m payment immediately to pay off lenders of its US parent company, which entered bankruptcy protection in September.

However, management appears to have lost faith that such a deal will be agreed, with sources telling The Daily Telegraph that Moorfields Corporate Recovery had been lined up to handle the administration.

It is thought that, unless Toys R Us receives a major cash injection, administrators will be appointed on Tuesday, and that the group met with the Pension Protection Fund on Friday to warn them about the development. The news was first reported by Sky.

Toys R Us has struggled to stay afloat recently, having posted a loss for seven of the last eight years amid dwindling shopper footfall and increasing competition from online retailers such as Amazon and Argos.