Receivers have been appointed to Xtra-vision, which employs 1,023 people in 152 stores around the country.
Joint receivers Luke Charleton and Colin Farquharson, of Ernst & Young, were appointed today.
The Tallaght-headquartered firm said that all of its stores will remain open while expressions of interest in the company are being sought by the receiver.
It also confirmed that all gift cards and customer credit balances remain unaffected and are fully redeemable.
In a statement, the company said that it has become unable to meet its debts as they fall due as a result of the withdrawal of trade credit by a number of its key suppliers.
Xtra-vision has been negatively affected by the rise in online streaming of movies and digital piracy.
''While the company's retail business continues to grow, its movie rental business has declined more rapidly than anticipated, most noticeably in areas with high speed broadband, which is linked to high levels of illegal downloading,'' the statement added.
The company is 60% owned by a firm called Birchhall Investments and 40% owned by NCB Ventures, which is made up of a series of private investors.
Birchhall is owned by Pageant Holdings, which is owned by business man Nick Furlong.
The receivers said it was their intention to work with the Xtra-vision directors to ensure that the company continues to trade as normal, with a view to selling the business as a going concern.
“We are advised that the majority of stores are profitable and collectively will be attractive to potential purchasers. We will work closely with management to assess the viability of each of company’s stores,'' Mr Charleton said.
“We will advertise the business seeking expressions of interest from third parties with a view to securing the early and successful disposal of the Xtra-vision, thereby ensuring the continuation of the business,'' he added.
Retail Excellence Ireland said that the Xtra-vision receivership comes as a result of a lack of focus on the part of Government on the needs of the domestic economy.
''While we welcome the work of Government to promote foreign direct investment, we believe a similar level of intensity and ingenuity must now be applied by Government to the needs of our domestic economy,'' commented the group's chief executive David Fitzsimons.