Retailer Party City files for bankruptcy and will liquidate 700 stores

By Mrinmay Dey

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

The retailer, which has been in business for over 40 years and sells festive items from themed decorations to Christmas costumes, said all of its 700 stores in the country would remain open when it begins going-out-of-business sales.

The Company, along with certain of its subsidiaries, filed for Chapter 11 in the US Bankruptcy Court for the Southern District of Texas. In a court filing, Party City Holdco listed both assets and liabilities in the $1 billion to $10 billion range and is estimated to have more than 10,000 creditors.

Party City Holdco’s senior lenders will provide the retailer with financial support needed to fund operations through the liquidation process, the Woodcliff Lake, New Jersey-based company said in a statement.

Troubled retailers often seek bankruptcy protection during the holiday season to take advantage of any cash infusion from recent sales.

Party City, which operates both brick-and-mortar stores and an e-commerce website, said it would retain most of its 12,000 employees during the sale period to help with the liquidation process.

The company first filed for Chapter 11 bankruptcy protection in the US last January. Later that year, it reached a plan to exit bankruptcy, which saw the cancellation of about $1 billion of the company’s debt.

The company has suffered since the pandemic due to shutdowns and store closures, along with inventory shortages and tight helium supplies due to global supply chain disruptions.

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

(Reporting by Mrinmay Dey in Bengaluru; Editing by Frances Kerry)