The company, which had 800 stores when it filed for Chapter 11 bankruptcy earlier this year, said it no longer had enough funds to purchase fall inventory and continue operations, forcing it to sell the remaining locations.

The company said it had "determined for a number of reasons that a plan to exit bankruptcy as a stand-alone going concern business is not a likely option," according to documents filed Tuesday in federal bankruptcy court in Delaware.

The documents said there are two potential bidders that may continue to operate the company's Ritz Camera, Wolf Camera, Kits Cameras, Inkley's and The Camera Shop stores. But the documents contain several provisions, such as waivers of state and local requirements applying to liquidation sales, that would clear the way for an immediate going out of business sale.

In an affidavit, Chief Restructuring Officer Marc Weinsweig said the company's lenders ordered the company in January to boost reserves, thereby reducing available credit.

He said this came after the recession caused Ritz's 2008 holiday sales to be "materially lower" than a year earlier. Ritz was also hurt by losses at Boater's World, which suffered falling sales in 2008 as gas prices soared.

"The loss of revenues and profit margins from the diminution in the photo-finishing business proved too much of a burden, coupled with the losses experienced by the Boater's World business in 2008," he wrote.