Party City filed for bankruptcy again on Saturday, marking its second filing in less than two years. The decision follows an announcement made on Friday, informing employees that the company would begin “winding down” operations. The nation’s largest party supply chain stated that filing for Chapter 11 bankruptcy would help “maximize value” for its stakeholders and allow for an efficient closure process.
Party City also informed its employees that stores would be closing on February 28. Until then, the approximately 700 stores will remain open for “going out of business” sales, while supplies last. The company assured that about 95% of its 12,000 employees would remain employed during the transition.
“It has been a true pleasure to be a part of your most special moments over the years. In the coming weeks, we hope you stop by to say goodbye and pick up your favorite items, whether you’re organizing a big celebration now or planning ahead for milestone moments to come,” the company stated in its filing.
Party City did not respond to requests for comment.
The New Jersey-based company faced challenges such as rising product costs due to inflation, which led to reduced consumer spending, according to CEO Barry Litwin. Combined with other factors, including its $800 million in outstanding debt, these issues led to the company’s second bankruptcy filing.
Party City Holdco Inc. previously filed for bankruptcy in January 2023 due to difficulties in managing its nearly $1.7 billion debt. The company was able to reduce this debt by nearly $1 billion and closed more than 80 locations between the end of 2022 and August 2024, according to its latest financial reports. In August, Party City appointed Barry Litwin as CEO, and the company successfully exited bankruptcy just a month later.
In its recent filing, Party City stated that it made “exhaustive efforts” to find a solution that would allow it to continue operations.
“It’s really important for you to know that we’ve done everything possible that we could to try to avoid this outcome,” Litwin told corporate employees in a meeting. “Unfortunately, it’s necessary to commence a winddown process immediately.”
The company has faced increased competition from e-commerce sites and pop-up stores like Spirit Halloween, along with pressure from large big-box retailers that have outpaced smaller chains.
According to Coresight Research, major chains are on track to close the most stores in a year since 2020. On Thursday, Big Lots also announced that it would begin “going out of business” sales at all of its locations after a plan to be rescued from bankruptcy by a private equity firm fell through.
