Party City Files for Chapter 11 Bankruptcy Again

By Mrinmay Dey
(Reuters) – Party City, struggling since the COVID-19 pandemic, filed for Chapter 11 bankruptcy protection in the United States on Saturday for the second time in two years. The company 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, stated that all of its 700 stores nationwide would remain open during a going-out-of-business sale.

Party City, along with certain subsidiaries, filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. The company listed assets and liabilities in the range of $1 billion to $10 billion and estimated having more than 10,000 creditors.

Senior lenders would provide the financial support necessary to fund operations throughout the wind-down process, according to a statement from the company based in Woodcliff Lake, New Jersey.

Troubled retailers often seek bankruptcy protection during the holiday season to benefit from potential cash influxes from recent sales.

Party City, which operates both brick-and-mortar stores and an e-commerce site, stated it would retain most of its 12,000 employees during the sale period to assist with the wind-down.

The company first filed for Chapter 11 bankruptcy protection in January last year and later reached a plan to exit bankruptcy, which included a cancellation of about $1 billion in company debt.

The pandemic has heavily impacted the company due to lockdowns, store closures, inventory shortages, and limited helium supplies caused by global supply chain disruptions.

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