The retailer, with fewer than 600 stores, plans to hand over management of the selected shops to liquidators Gordon Brothers and shut them for good in January, according to a leaked memo from a KB executive to employees.
The firm declined to comment on the documents or potential store closings.
KB Toys filed for bankruptcy in 2004 after a price war with Wal-Mart caused sales to plummet. At that time the chain operated 1,231 stores.
Private equity firm PKBT Funding became majority owner in 2005 when the chain emerged from bankruptcy.