Its US parent company, the Reader's Digest Association, has warned that it may be forced to put the UK business into administration in a matter of weeks, unless it can secure a last-minute deal with the Pensions Regulator.
The and had been hoping to come out of bankruptcy and restructure the business in the next few weeks.
However, that emergence has been delayed by the Pensions Regulator's decision to block an agreement between trustees of the UK pension plan, the Pension Protection Fund and the UK subsidiary.
Under the terms of the deal, the parent company had agreed to make a payment of £10.9m and transfer a one-third interest in the equity of the UK company to the UK pension scheme trustees. The scheme would then transfer to the Pension Protection Fund (the insurance scheme that ensures insolvent employers can deliver on pensions pledges).
In a statement, the Reader's Digest Association, said: "In light of this unusual and unexpected development, The Reader's Digest Association, Inc. has filed a motion in the US Court in which it notes that unless the pension deficit issue is resolved, it will no longer be able to support the UK business indefinitely and therefore, the UK business may need to file for administration."
Readers Digest UK, which uses the magazine to help it sell books, CDs, DVDs and financial services, employs 135 people and has offices in Swindon and Canary Wharf. It has a pension deficit of £125m.
A spokeswoman said that "without the pension issue the UK business is solvent".
Reader's Digest is one of the UK's highest-selling magazines, with an average ABC audited circulation of 541,282 in the first six months of 2009, and a current cover price of £3.49. However, most of its copies are sold on subscription deals and its circulation is down 11.9% from the first six months of 2008.
The former Radio Times editor, Gill Hudson, became editor-in-chief at the UK edition of the publication in June last year.
Reader's Digest has offices in 44 countries and it publishes 50 editions of Reader's Digest in 21 languages.
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