Conways Toymaster has given notice of its intent to appoint a proposed administrator.
The administrator will review the company's stock and trading position to attempt to produce a solution to the benefit of all creditors and employees of the firm.
An official statement from Toymaster's Roger Dyson said that it was sad news for Toymaster and the whole of the UK toy industry, and a demonstration of the difficult trading conditions experienced by UK toy retailers in 2013.
The statement read: "Obviously it is too soon to understand the full impact that this will have on Toymaster Ltd, but there is little doubt that there will be a significant financial loss to the group.
"Although this will undoubtedly cause Toymaster some difficulties, the group remains financially stable (Conways was less than five per cent of Toymaster's turnover).
"Toymaster has, as ever, paid our suppliers on time and will continue to do so. Toymaster has informed our suppliers of the situation and we have arranged meetings over the next two weeks with our bankers and credit insurers to ensure that Toymaster members' businesses are not disrupted by this sad news.
"At present I have no more information that I can share with you, although you may be assured that as ever Toymaster will be as transparent as is possible in sharing relevant information with both our members and suppliers."