Toys "R" Us may stage a comeback which may mean the toy retailer returns to the world of brick-and-mortar.

A group of investors, made of secured lenders, has cancelled a bankruptcy auction for Toys "R" Us intellectual properties and has instead proposed a reorganization plan that would allow the company to relaunch a business using those assets.

According to a bankruptcy court filing Tuesday, the sale scrap comes despite receiving a number of qualified bids.

The hedge fund group that held the auction now believes that it stands a better chance of a realizing a return on its investment by potentially reviving the toy chain, rather than selling it off for parts.

The group will attempt to establish a "company that maintains existing global license agreements and can invest in and create new, domestic, retail operating businesses under the Toys "R" Us and Babies "R" Us names."

The investors said they'll work with potential partners to develop new ideas for stores in the U.S. and other countries "that could bring back these iconic brands in a new and re-imagined way."

Toys "R" Us suffocated under a staggering $5 billion debt load before liquidating its U.S. business this year.

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