Party City Holdco Inc. is seeking bankruptcy protection, a final blow for the retailer that struggled to rebound after sales plummeted during the pandemic.
The firm filed for Chapter 11 bankruptcy in the Southern District of Texas on Tuesday, court documents show. It reached a plan with holders of more than 70% of its first-lien secured notes that will see it cut debt and shed leases, according to a statement.
The company’s restructuring plan, which is subject to court approval, calls for the secured bondholders to swap their holdings for equity in the reorganized company. Existing stock will be canceled, with no expected recovery for shareholders. The New Jersey-based party supplies retailer was struggling even before Covid-19, hurt by competition from retailers selling a broader array of goods like Amazon.com Inc. and Target Corp. The pandemic added to strains as social distancing quashed the festivities that are the company’s lifeblood.
The company swapped debt and refinanced to buy itself time to bounce back during the pandemic, but sales have lagged below pre-pandemic levels. In recent weeks, it began laying the groundwork for a bankruptcy filing, Bloomberg reported.
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