The capabilities of collaborative robotics have transcended the conventional abilities of decentralised robots as it provides benefits such as scalability, flexibility and robustness. Collaborative robots can operate safely in complex human environments without being restricted by the safety cages or barriers that often accompany them. Collaborative robots can be used for various applications such as machine tending, packaging, process tasks and pick and place. This paper proposes an improvement of the current virtual impedance algorithm by developing an adaptive virtual impedance controlled mobile multi-robot system focused on dynamic obstacle avoidance with a controlled planar movement. The study includes the development of a mobile multi-robot platform whereby each robot plans a path individually without a supervisor. The proposed system would implement a two-layered hierarchy for robot path planning. The higher layer generates a trajectory from the current position to the desired position, and the lower layer develops a real-time strategy to follow the generated trajectory while avoiding static and dynamic obstacles. The key contribution of this paper is the adaptive virtual impedance controller for a multi-robot system that will maintain movement stability and improve the motion behaviour in a dynamic environment.