Toys R Us, which has two stores in Kent, has filed for bankruptcy protection in the US and Canada.
The US retail giant hopes to restructure debts of £3.7 billion, having struggled against competition from groups like Amazon.
The firm, which employs 64,000 people, has 1,600 stores worldwide, including sites in Chatham and Tunbridge Wells, as well as Lakeside shopping centre in Essex.
It said the vast majority of its stores are profitable and will continue to operate as usual.
The company said it had received more than $3 billion (£2.2bn) of “debtor-in-possession” financing from various lenders including a bank syndicate led by financial services giant JP Morgan.
Chairman and chief executive Dave Brandon said: “Today marks the dawn of a new era at Toys“R”Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way.
“Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion (£3.7bn) of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide.
“We are confident that these are the right steps to ensure that the iconic Toys“R”Us and Babies“R”Us brands live on for many generations.”