Party City Files for Bankruptcy a 2nd Time in Retail Déjà Vu
(Bloomberg) -- Party City Holdco Inc. plunged into bankruptcy for the second time in two years and said it will begin to wind down its approximately 700 stores after sales faltered under the yoke of stubborn inflation.
The New Jersey-based retailer of party goods filed for Chapter 11 bankruptcy in Texas, court documents show.
The retailer said that it would retain more than 95% of its 12,000 employees to assist with the wind-down process in a separate release.
Party City had cut almost $1 billion in debt and slimmed down to about 800 stores nationwide when it exited its first bankruptcy in October 2023. But it wasn’t enough. Troubles 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 intends to close its stores and wind-down operations. Bed Bath & Beyond sold its brand to e-retailer Overstock after filing for bankruptcy and shutting down 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 the operator of Dirt Cheap, also fell into bankruptcy in 2024.
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 US Bankruptcy Court for the Southern District of Texas.
(Adds information about bankruptcy, context starting in fourth paragraph.)
©2024 Bloomberg L.P.
No comments:
Post a Comment