The high street chain said it has filed a notice to appoint administrators.
The company, which has some 127 sites and about 1,500 employees, said coronavirus restrictions had put an “unbearable strain” on the business.
November’s lockdown came at a critical time for Paperchase, which is not classed as essential retail and therefore had to close its stores.
About 40 per cent of the firm’s annual sales are made in the Christmas period between November and December, according to the firm.
A spokesperson for Paperchase said: “The cumulative effects of lockdown one, lockdown two – at the start of the Christmas shopping period – and now the current restrictions, have put unbearable strain on retail businesses across the country.”
It launched a company voluntary arrangement in March 2019 in a bid to cut costs and make the business more viable.
And while online sales had continued to perform strongly, Paperchase said, this was not enough to mitigate the overall impact of temporary closures.
The spokesperson added: “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.”