Party City Holdco Inc. plunged into bankruptcy for the second time in two years and said it will begin closing its roughly 700 stores after sales faltered under the yoke of stubborn inflation.
The New Jersey-based party supplies retailer filed for Chapter 11 bankruptcy in Texas, court documents show.
In a separate statement, The retailer said it would retain more than 95% of its 12,000 employees to assist in the liquidation process.
Party City had cut nearly $1 billion in debt and was down to about 800 stores nationwide when it emerged from its first bankruptcy in October 2023. But it wasn’t enough. Problems resurfaced after the chain was hit by a triple whammy of inflationary pressures on consumersrising wages and competition from online sellers.
The retailer, which was acquired by senior lenders after its first bankruptcy, listed assets and liabilities of at least $1 billion in its Chapter 11 petition filed in Houston. Party City’s principal owners are Capital Group, investment firm Davidson Kempner and Silver Point Capital, according to court documents.
Party City may sell its brand or other assets in Chapter 11 even though the company has said it intends to close its stores and liquidate operations. Bed Bath & Beyond sold its brand to e-tailer Overstock after filing for bankruptcy and closing its stores in 2023.
The company, which sells everything from costumes to birthday cake toppers, posted a net loss of $91 million in the third quarter of 2023, according to his last public statement. A group of secured bondholders privatized it after the restructuring.
Party City is not the only one. Some discounters, or so-called “extreme value” retailers, including Big Lots Inc. and the operator of Dirt Cheap, also fell into bankruptcy in 2024.
Anagram Holdings, a Party City subsidiary dedicated to manufacturing balloons, filed for bankruptcy in 2023. UA group of Anagram lenders agreed to take over the balloon business in exchange for forgiving about $168 million in debt.
The case is Party City Holdco Inc, number 24-90621, in the U.S. Bankruptcy Court for the Southern District of Texas.
