The festivities are winding down at Party City. A retailer that recently emerged from bankruptcy last year has once again filed for Chapter 11 protection.
A company based in New Jersey submitted a filing early Saturday in the U.S. Bankruptcy Court for the Southern District of Texas. Party City Holdings Inc. has announced plans to “implement an orderly wind down of its business and liquidation of its assets,” according to the recent filing.
The company plans to auction its assets or, in the absence of a sale, will “initiate store closing sales to liquidate all of the Party City Group Companies’ retail and wholesale inventory and locations,” as stated in the filing.
Party City, previously operating around 750 stores, filed for Chapter 11 bankruptcy in January 2023. The company successfully emerged from the process in October 2023, reducing its debt by $1 billion. The company has appointed a new CEO, Barry Litwin, who began his tenure in August 2024.
However, the retailer clearly did not come out on a strong enough financial basis. According to a recent report by Bloomberg, the company is contemplating either a sale or a second bankruptcy.
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Party City filed for bankruptcy on Saturday, disclosing assets ranging from $1 billion to $10 billion and liabilities in the same range. The company indicated it has between 10,000 and 25,000 creditors.
However, the retailer clearly did not come out with a strong enough financial position. According to a recent report by Bloomberg, the company is contemplating either a sale or a second bankruptcy.
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Party City filed for bankruptcy on Saturday, revealing assets ranging from $1 billion to $10 billion and liabilities within the same range. The company indicated it has between 10,000 and 25,000 creditors.
Party City is set to close its doors, following an effort to revive its business.
In September, Party City implemented price reductions on over 2,000 items, averaging a 20% discount, as part of a strategy to entice hesitant customers and boost sales. “Consumers are experiencing ongoing pressure on their budgets amid an uncertain environment, which can transform joyous occasions into stressful situations due to affordability concerns,” Litwin stated at that time.
In recent months, multiple stores have reported closures, notably in Topeka, Kansas, and Wichita Falls, Texas.
According to Coresight Research, Party City has confirmed 18 store closures, with an additional closing scheduled for 2024. The research firm reports that this follows 65 confirmed closures in 2023.
In recent developments, other retail chains have also struggled, with Macy’s revealing last week that it would expedite store closures. Additionally, Big Lots made headlines earlier this week by announcing its decision to go out of business.According to Coresight Research, the year has seen a total of 7,327 store closings and 5,919 openings across the United States. The number of store closures has significantly increased, surpassing the figures from 2023, which saw 5,473 closures alongside 5,751 openings. This marks the highest level of store closures since 2020, a year marked by the pandemic’s impact on physical retail. Deborah Weinswig, CEO of Coresight Research, shared these insights with USA TODAY.
“At the beginning of 2024, there was a prevailing belief that the year would be robust, with store openings expected to surpass closures.” “However, 2024 has emerged as a difficult year for brick-and-mortar retailers,” she stated.
Shoppers are increasingly frustrated with extended wait times, empty shelves, and disorganized retail environments. “Party City has faced all three of these challenges and has ultimately paid the price,” Weinswig stated.
Party City is set to close, raising concerns as past indicators of trouble come to light.
In October 2024, a group of former Party City employees initiated a class action lawsuit against the company, claiming that they were not provided with the legally mandated notice prior to their sudden layoffs in September.
In 2021, New Jersey committed to providing Party City with a $10 million tax break as the company relocated its headquarters to Woodcliff Lake, a wealthy suburb in Bergen County located just south of the New York State border.
Following the company’s declaration of bankruptcy, state officials reported that the company had not received any funds from tax breaks and would not do so until it demonstrated that it had fulfilled its job creation commitments.
