WEEWORLD, the Glasgow-based creator of the WeeMees gaming network, has gone into provisional liquidation with the immediate loss of 19 jobs.
Eleven staff have been retained at the company's office on Blythswood Square while Tom MacLennan and Iain Fraser, joint provisional liquidators at FRP Advisory, seek a buyer for the business and its assets.
The collapse came after the company ran into funding problems, having made "substantial losses" since being set up in 2006.
Mr MacLennan said: "It's a fairly classic internet business in that it's had substantial funding over the years, most of it investors, equity and loans, but it has obviously made substantial losses over the period.
"It reached the stage where there was no more investors', loan or equity funding available, and when the projections were run there was a funding gap going forward, which if you look at the historic numbers is no surprise.
"They had to reduce the staffing, but they didn't have the funds to meet redundancy costs, so essentially it had no option but to go into liquidation."
WeeWorld called in the liquidators with £15.4 million due in investor loans, much of it originating in the US, with further third party debts of around £300,000
The total losses accumulated by the business by the time of its latest accounts in May had reached £16.7 million.
In spite of the firm's difficulties, Mr MacLennan said the WeeWorld website has a strong subscriber base and is "cash generative."
The company has more than 60million mobile and web players of its WeeMees games, which are popular with teenagers. The games, downloaded from the weeworld.com website, allow users to create their own characters and interact on social media channels.
As well as games, it also sells stickers and apps, which attract income through advertising.
Interest in the business has already been received from potential buyers, including two local enquiries, but Mr MacLennanis not convinced it will be sold in its entirety.
He said: "We have active interest at the moment, so we are hopeful something will move fairly quickly. The most attractive bit is the WeeWorld website, but there are also stickers and apps which may excite separate interest."