Office Outlet, which was part of Staples, has fallen into administration, putting 1,200 jobs at risk.
Two partners at Deloitte were appointed as administrators on Monday and said falling demand for office stationery supplies had caused the decline.
Office Outlet will continue to operate as normal while a buyer is found. The company went through a management buyout in September which resulted in the former HMV owner Hilco as a minority shareholder.
Chief executive Chris Yates said Office Outlet had "transformed from the heavily loss-making old Staples business to a near break-even modern multichannel retailer".
He added: "However, additional growth capital was required to continue delivery of the next stage of the management buyout business plan. Despite being highly impressed by the Office Outlet story potential investors have held back due to retail sector sentiment and the general level of uncertainty."
Joint administrator Richard Hawes said: "The company has recently experienced a reduction in credit from key suppliers, given the economic outlook which has severely impacted the financial position of the company."