On Saturday, retailer Party City voluntarily filed for its second Chapter 11 bankruptcy in under two years in the Southern District of Texas. The move follows the firm’s early 2023 restructuring, which eliminated nearly $1 billion of its debt.
However, the retail industry’s persistent inflationary and consumer-based pressures, coupled with its leftover debt, proved too much for the New Jersey-based company to overcome, leading it to begin the necessary steps to close its business after nearly 40 years.
The firm expects to have between 10,000 to 25,000 creditors and reported that its estimated assets and liabilities would fall between $1 billion and $10 billion.
The firm’s debt load primarily consisted of trade debts, and its top unsecured creditors included suppliers Anagram International, KBW Global Corporation and Unique Industries Incorporated, owing each of the firms over $2.1 million.
Founded in 1986, the retail party supply store has selected New York’s Paul, Weiss, Rifkind, Wharton & Garrison as its legal counsel and Houston’s Porter Hedges as local counsel.
The Paul Weiss team will include New York-based partners Kenneth Ziman, Christopher Hopkins and associate Stephanie Lascano. Houston-based Porter Hedges tapped partners John Higgins, Aaron Power, and M. Shane Johnson, as well as associates Jordan Stevens and Grecia Sarda.
Additionally, it selected AlixPartners as its financial advisor and retained Gordon Brothers to aid in its going-out-of-business sales.
Party City has begun executing these going-out-of-business sales in its nearly 700 stores nationwide and is seeking financial support from its senior lenders to fund operations and pay its employees during the transition period.
The filing’s case number is SDTX 24-90619, and it was assigned to Houston Bankruptcy Judge Alfredo Perez.