Party City Files for Chapter 11 Bankruptcy to 'Substantially Reduce Debt and Optimize Liquidity'
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Party City is restructuring its business.
On Tuesday, the New Jersey-based retail chain announced that it has filed for Chapter 11 bankruptcy protection to "substantially reduce debt and optimize liquidity."
"In the face of pandemic headwinds, a global supply chain crisis, and other macroeconomic challenges that have faced our industry, we have made significant strides in [Party City Holdco Inc.'s] ongoing transformation — establishing a solid foundation for long-term growth and continued success as the market leader in the celebrations space," said Brad Weston, Party City's Chief Executive Officer, in a press release.
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In November, the company's third-quarter report showed that it is currently facing a $1.6 billion debt load. To confront this debt, the retail specialty store giant said in its press release that it had secured $150 million in financing to keep its 761 stores in the United States and online business operating.
The company's court filing summary states that the financing "will provide ample liquidity to support continued operations during the process across the Company's retail and consumer products divisions while maintaining momentum on its transformation."
The company's new business plan includes evolving its Halloween City pop-up stores. The company noted on Tuesday that a crucial initiative is currently underway with a goal to deliver more assortments in its products to customers.
While the restructuring is expected to be completed in the second quarter of 2023, Party City said in its announcement that "day-to-day operations will continue as usual, with no interruption."
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"There is no change to team members' day-to-day roles and responsibilities," the company's filing summary states. "Team members can expect to continue to be paid as usual and for benefits to continue in the normal course, all without interruption."
