Stationery chain Paperchase is on the brink of collapsing into administration after sales dropped dramatically, following Tier 4 restrictions closing some stores at the end of last year.
The firm, which has 127 stores and 1,500 employees, confirmed it has filed a notice to appoint administrators from PwC to advise on its insolvency process.
Paperchase launched a Company Voluntary Arrangement (CVA) restructuring in March in an attempt to turn around its fortunes but saw this heavily impacted by the pandemic.
A Paperchase spokesman said: "The cumulative effects of lockdown 1.0, lockdown 2.0 - at the start of the Christmas shopping period - and now the current restrictions have put unbearable strain on retail businesses across the country.
"Paperchase is not immune despite our strong online trading.
"Out of lockdown we've traded well, but as the country faces further restrictions for some months to come, we have to find a sustainable future for Paperchase.
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"We are working hard to find that solution and this NOI (Notice of Intent to appoint administrators) is a necessary part of this work. This is not the situation we wanted to be in.
"Our team has been fantastic throughout this year and we cannot thank them enough for their support."
The news comes as the government announced a one-off grant for businesses during the third lockdown.
A one-off grant of up to £9,000 will be available to businesses forced to close in these sectors and is expected to support 600,000 business properties.
Another £594 million will be made available to councils and devolved nations to support businesses not covered by the new grants.
The Treasury said the new support grants will offer companies up to £9,000 through to March as part of a £4.6billion package "to support businesses and jobs until the spring."
