Once a dominant toys player in the USA, Toys “R” Us has filed for bankruptcy protection in the USA and Canada.

Toys “R” Us filed Chapter 11 documents late Monday in the US Bankruptcy Court in Richmond, Virginia. The retailer is attempting to restructure its debt, as it has reportedly struggled against larger rivals such as Amazon.

BBC reports that the move casts a shadow over the future of the company’s nearly 1 600 stores and 64 000 employees.

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The Company’s European operations are not part of the bankruptcy proceedings and Toys “R” Us says its operations in Australia, about 255 licensed stores and a joint venture partnership in Asia are also not included in the bankruptcy move.

This bankruptcy filing has significantly highlighted how traditional retailers are struggling in the USA, compared to online rivals, which continue to capture market share.

The company said in a statement that most of its stores around the world remained profitable and would continue to operate as normal through the holiday period, which is when they do most of their business.

Toys “R” Us is also looking to online sales to secure its future and recently launched web stores for its products.

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GlobalData Retail MD Neil Saunders told the BBC that the past decade has seen a dramatic change in the domestic toy market, with new channels and increased competition having a deleterious impact on the sector, particularly traditional toy stores.

GlobalData Retail estimates that in 2016 about 13,7% of all toy sales were made online, up from 6,5% five years ago. “Unfortunately, Toys “R” Us has not responded effectively to these challenges,” said Saunders.

The company latest move is its process to restructure and make it viable over the long-term, as immense debt levels are its most immediate problem.

Toys “R” Us sells toy and baby merchandise in more than 1 500 Toys “R” Us and Babies “R” Us locations worldwide and through websites including Toysrus.com and Babiesrus.com.

– BBC