(Bloomberg) — Party City Holdco Inc. plunged into bankruptcy for the second time in two years and said it will begin winding down its roughly 700 stores after sales falter under the yoke of stubborn inflation.
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The New Jersey-based party goods retailer has filed for Chapter 11 bankruptcy in Texas, according to court documents.
The retailer said in a separate statement that it would retain more than 95% of its 12,000 employees to assist with the winding down process.
Party City had cut nearly $1 billion in debt and was down to about 800 stores nationwide when it exited its first bankruptcy in October 2023. But it wasn't enough. Trouble resurfaced after the chain was hit by a triple whammy of inflationary pressures on consumers, rising wages and competition from online sellers.
The retailer, which was taken over 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 largest owners include Capital Group, investment firm Davidson Kempner and Silver Point Capital, according to court papers.
Party City may sell its brand name or other assets in Chapter 11 even though the company has said it plans to close its stores and wind down operations. Bed Bath & Beyond sold its brand to e-retailer 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 its last public filing. A group of secured bondholders took it private after the restructuring.
Party City is not alone. Some discount stores, or so-called “extreme value” retailers, including Big Lots Inc. and operator Dirt Cheap, to bankruptcy in 2024 as well.
Anagram Holdings, Party City's balloon manufacturing affiliate, filed for bankruptcy in 2023. A 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 United States Bankruptcy Court for the Southern District of Texas.
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