Party City mulls second bankruptcy, just over a year after first

PARTY City Holdco is considering options including a sale or a potential bankruptcy filing, just over a year after it emerged from Chapter 11, according to sources with knowledge of the matter.

The New Jersey-based retailer, which sells balloons and other party supplies, is behind on rent at some locations and running out of cash to maintain operations, said the sources, who asked not to be identified discussing a private matter.

The retailer’s struggles stem from years of lagging sales that have left it unable to keep pace with a sizeable debt load. It entered bankruptcy in 2023 with about US$1.8 billion in debt.

Lenders including Monarch Alternative Capital and Silver Point Capital took over ownership of Party City when it exited Chapter 11 protection and reduced its debt load by about US$1 billion in the process. The party shop avoided liquidation, unlike some of its struggling peers, such as Bed Bath & Beyond.

Representatives for Party City and Monarch did not respond to requests for comment. A representative for Silver Point declined to comment.

But emerging from bankruptcy with more than US$800 million of debt still in place has continued to drag down profits and strain Party City’s liquidity, one of the sources said. BLOOMBERG

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