Party City Holdco Inc. has officially filed for Chapter 11 bankruptcy for the second time in just over a year, submitting the petition in Texas on December 21, 2024. This latest filing follows the company's emergence from its first bankruptcy in October 2023, during which it successfully eliminated nearly $1 billion in debt and reduced its store count to about 800 [dd8083d3].
The current bankruptcy filing is a significant setback for the retailer, which plans to wind down around 700 stores as part of its restructuring efforts. Despite the closures, the company has announced that over 95% of its 12,000 employees will be retained to assist with the wind-down process [dd8083d3].
Party City has faced mounting challenges, including inflation, rising wages, and fierce competition from online retailers, which have all contributed to its financial struggles. In the third quarter of 2023, the company reported a substantial net loss of $91 million, underscoring the difficulties it has encountered in the current retail landscape [dd8083d3].
Additionally, the company's balloon-manufacturing affiliate, Anagram Holdings, filed for bankruptcy in 2023, with lenders forgiving $168 million in debt as part of its restructuring [dd8083d3]. This series of financial setbacks raises questions about the long-term viability of Party City in an increasingly competitive market, as it attempts to navigate the complexities of retail operations amidst economic pressures [0b508ea4].
The situation at Party City is reflective of a broader trend in the U.S. corporate landscape, where repeat bankruptcies are occurring at the fastest pace since 2020. Over 60 companies have filed for bankruptcy multiple times in the past two years, with U.S. corporate bankruptcy filings reaching a 14-year high in 2024. Joann Inc., another retailer, is also considering filing for bankruptcy again less than nine months after its own restructuring [b40d8a7].
The retail industry continues to struggle with challenges such as inflation and the migration of consumers to online shopping, which exacerbates financial difficulties for traditional brick-and-mortar stores. In its previous bankruptcy, Party City closed 48 stores and renegotiated 450 leases, but ongoing financial troubles ultimately led to its liquidation announcement just before Christmas 2024 [b40d8a7].