Deloitte, which was appointed to handle the administration late last month, said it had begun consultations with employees and was drawing up a closure programme for Modelzone's 47 stores over the next few days.
It made 11 staff redundant at the retailer's head office in Lancing, West Sussex, on Thursday.
Closing down sales will be launched across stores, with shops set to shut over the coming weeks. Deloitte said Modelzone gift vouchers would continue to be honoured, but only towards 50% of the purchase price.
Richard Hawes, joint administrator at Deloitte, said: "Despite our continued efforts, we have been unable to identify a buyer for the retail business. We would like to thank the company's employees for their support and professionalism during this time."
Modelzone - the UK's largest specialist toy and model chain - and its wholesaling arm, Amerang, hit the wall after the retailer lost out to online competitors and suffered hefty losses on onerous shop leases. Deloitte confirmed it continues to hold talks with potential buyers for Amerang, which is profitable and still trading.
Hornby said last month that it was an "important business partner", but added that it had been kept informed of Modelzone's trading woes before it went into administration and had been able to manage its financial exposure at an "acceptable level".
Modelzone was founded by David Mordecai in 1987 after he bought Brighton-based Model Aerodrome, rebranding it Modelzone as he expanded the chain. Mr Mordecai, who is chief executive of Hawkin's Bazaar parent Tobar Group, had reportedly been considering a rescue bid for Modelzone.
Modelzone's demise marks the latest retail casualty after furniture chain Dwell went bust in June, with 23 stores closed and around 150 jobs lost. But Dwell co-founder Aamir Ahmad kept the ailing business alive by agreeing a deal to buy a number of stores from administrators, securing jobs for around half the 300-strong workforce.