Paperchase is on the brink of administration as the majority of stores were forced to close over the Christmas period.

The retailer, which has 127 stores and 1,500 employees, has filed a notice to appoint administrators from PwC. Whilst the group said that it had strong online sales, it was not “immune” to store closures over lockdown.

Normally 40% of sales come from trading in November and December.

Paperchase underwent a company voluntary arrangement (CVA) in March 2019 when it tried to cut costs.

A 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.

“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 on Paperchase comes as Rishi Sunak announced new grants for businesses. The grants will be worth around £4bn and are expected to benefit over 600,000 business properties across the UK.

Sunak said: “The new strain of the virus presents us all with a huge challenge – and whilst the vaccine is being rolled out, we have needed to tighten restrictions further.

“Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the Spring. This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”