Mega party supply shop Party City filed for bankruptcy protection on Tuesday.
The company, Party City Holdco Inc. (PCHI) filed for Chapter 11 Bankruptcy protections along with some of its domestic subsidiaries, according to a press release on Tuesday. Some other subsidiaries and its Anagram business are not included in the bankruptcy process. The company brought on a financial advisor in November.
Party City also said that it has struck a deal with an ad hoc group in order to help with the restructuring and cut down on its debt. The company noted that the restructuring was “[p]re-negotiated” and “[e]xpedited,” and they anticipate it will cut down on debt and best utilize its liquidity. It noted that it has $150 million from the ad hoc group that will let it keep its stores going.
“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 PCHI’s ongoing transformation – establishing a solid foundation for long-term growth and continued success as the market leader in the celebrations space,” Brad Weston, Chief Executive Officer of PCHI said in the release. “Today’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.”
“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. We appreciate the commitment of our team members and the continued support of our partners as we further enhance our position as the ‘go to’ one-stop-shop for celebrating life’s special moments,” Weston noted.
Party City stores are still open for people to shop at, as well as its online website. The company anticipates the restructuring process to be done in the second quarter of this year.
It is also filing motions in order to keep up its everyday workings, which involve its requests to keep paying its workers and giving them benefits. It also wants to “honor customer programs and policies.”
While Party City has grown, it has also had to come to terms with the increasing popularity of e-commerce companies and major retailers, CNBC reported. It didn’t expand its online platform, but rather spent money maintaining 800 shops around the United States.
“They’re competing against Walmart, and Target and Amazon and the dollar stores and grocery stores,” Joe Feldman, an analyst at Telsey Advisory Group, said. He used to cover Party City since the company went public in 2015, but stopped at the end of last year.