Party City Files for Chapter 11 Bankruptcy

By Mrinmay Dey

(Reuters) – Party City, struggling since the COVID-19 pandemic, filed for Chapter 11 bankruptcy protection in the United States on Saturday, marking its second such filing in two years as it plans to wind down its retail and wholesale operations.

The retailer, in business for over 40 years and selling party supplies from themed decorations to Christmas costumes, announced that all 700 of its stores in the country would remain open as it begins a going-out-of-business sale.

The company, alongside certain subsidiaries, filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. In its court filing, Party City Holdco (OTC: PRTYQ) listed assets and liabilities in a range between $1 billion to $10 billion and estimated more than 10,000 creditors.

Party City Holdco's senior lenders are providing financial support necessary to fund operations through the wind-down process, as stated by the company based in Woodcliff Lake, New Jersey.

Troubled retailers often seek bankruptcy protection during the holiday season to leverage cash infusions from recent sales. Party City, which operates both brick-and-mortar stores and an e-commerce website, plans to retain most of its 12,000 employees during the sale period to assist in the wind-down process.

The company previously filed for Chapter 11 bankruptcy protection in January last year, later reaching a plan to exit bankruptcy that involved canceling about $1 billion in company debt.

Challenges faced by the company since the pandemic include lockdowns and store closures, inventory shortages, and tight helium supplies due to global supply chain disruptions.

Amscan, a designer, manufacturer, and distributor of celebration products operated by Party City Holdco, also filed for bankruptcy on Saturday.