Party City shared on Tuesday that it has filed for bankruptcy.
The party retailer shared the news in a press release, noting that the move was an effort to cut costs and restructure the company in order to reduce its debt.
The company filed for relief in the U.S. Bankruptcy Court of the Southern District of Texas, according to the release. It was also noted that Party City’s companies located outside the country, and its franchise stores in Anagram, are not a part of the bankruptcy filing.
Party City noted in its release that it requested the court allow it to maintain “business-as-usual operations” so it can continue to pay wages and provide employee benefits.
Along with its online website, Party City has more than 800 locations across 45 states in the U.S.
The company’s CEO, Brad Weston, shared a statement in the news release, saying that part of the reasoning behind the filing was the impacts the company faced from the pandemic and supply chain crisis.
“As we take this important step to put our business on stronger financial footing for the future, we are as committed as ever to inspiring joy by making it easy for our customers to create unforgettable memories,” Weston said in the release.
Along with the news of the bankruptcy filing in the release were several other notable changes in the company’s business strategy. These changes include evolving Halloween City pop-up stores, converting flagship stores to “next-generation prototypes,” and improving Party City’s online store.
“[Tuesday’s] action to strengthen PCHI’s balance sheet will bolster our ability to further advance our strategic priorities and continue to innovate and elevate the customer experience,” Weston said.
The press release also shared that an agreement had been reached with the majority of the company’s senior secured noteholders called the Ad Hoc Group, which will see Party City receive $150 million in debtor-in-possession financing from the group.
The debtor-in-possession financing is expected to help with the company’s goals of “expedited restructuring” to reduce its debt. The restructuring is expected to be completed by 2023’s second quarter.
Money from the Ad Hoc Group will also allow Party City to honor store credits, special offers, and promotions. The company did note that returns and refunds would not be impacted by the filing.
“We will operate as usual, and our supplier relationships will remain essential,” the company said in its release.
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