Party City bankruptcy filing: What it means
Party City, the nation’s largest party supply chain, has filed for bankruptcy for the second time in under two years. This decision follows the retailer’s announcement to employees that it would be “winding down” operations. The company stated that filing for Chapter 11 bankruptcy is a move to “maximize value” for its stakeholders and ensure a smooth closure process.
Employees were informed that stores would be closing on February 28, but in the meantime, Party City’s approximately 700 locations will remain open for “going out of business” sales while supplies last. Despite this development, the company plans to retain around 95% of its 12,000 employees. In a statement, Party City expressed gratitude for being part of special moments and invited customers to visit for one last time to pick up their favorite items.
CEO Barry Litwin cited inflationary pressures on product costs and consumer spending as contributing factors to the bankruptcy filing, along with the company’s $800 million outstanding debt. This marks Party City Holdco Inc.’s second bankruptcy, the first being in January 2023. After reducing nearly $1 billion in debt and closing over 80 locations, the company appointed Litwin as CEO in August and successfully emerged from bankruptcy a month later.
Despite exhaustive efforts to find a way forward, Party City made the difficult decision to commence a winddown process to ensure the best outcome for all involved. The company faced competition from e-commerce sites and seasonal supply concepts, along with pressure from big box retailers. This trend is reflected in other major chains, with an expected high number of store closures for the year.
On a related note, Big Lots recently announced “going out of business” sales after a rescue plan fell through. This is a challenging time for the retail industry, but Party City remains optimistic about the future.
