On Saturday, December 21, the largest party supply chain store in the United States, Party City, filed for Chapter 11 bankruptcy protection. This marks the second time in two years that the company has filed for bankruptcy protection. Party City plans to close its 700 stores across the United States, but the operations of Party City’s Canadian branch will not be affected.
According to Reuters, Party City has been in business for over 40 years, selling a variety of party supplies from themed decorations to Christmas costumes. The company announced on Saturday that while liquidation sales would begin, all 700 stores in the United States will remain open.
The company and some of its subsidiaries filed for Chapter 11 bankruptcy protection in the Southern District of Texas. In the documents submitted to the court, Party City Holdco listed assets and liabilities ranging from $1 billion to $10 billion, with over 10,000 creditors estimated.
Headquartered in Woodcliff Lake, New Jersey, Party City Holdco stated in a press release that senior lenders will provide the necessary financial support to the retailer to fund its operations during the liquidation process.
Struggling retailers often seek bankruptcy protection during the holiday season to take advantage of the cash influx from recent sales.
Party City operates both physical stores and an e-commerce website. The company has stated that it will retain a majority of its 12,000 employees during the liquidation process to assist with operations.
The company first filed for Chapter 11 bankruptcy protection in the United States in January of last year. Later in the same year, they reached a plan to exit bankruptcy, canceling approximately $1 billion in company debt.
A spokesperson for Canadian Tire told CityNews on Friday that Party City’s Canadian branch is a completely separate entity and is not affected by the closures of the U.S. stores.
Canadian Tire acquired Party City Canada in 2019, ensuring it remains unaffected by the closures in the United States.
“The operation of Party City in Canada is completely different from Party City Holdco in the U.S.,” said the spokesperson. “Party City Canada operates both online and in-store, continuing to provide Canadians with everything they need to celebrate all moments in their lives.”
As of 2021, Party City is the largest party supply store in the United States, employing around 6,400 full-time workers and 10,100 part-time staff.
The company sells balloons, Halloween costumes, and other party supplies. In the increasingly competitive landscape of e-commerce and pop-up concepts like Spirit Halloween, Party City has faced challenges. Competition from major retailers like Amazon, Walmart, and Costco has also hit smaller chain stores hard.
Party City has also had to grapple with increased costs and a shortage of helium during the pandemic, which have affected its crucial balloon business.
This year, with consumer concerns about bankrupt retailers escalating, this chain store has joined the growing list of bankrupt retailers.
Amscan, a celebration products design, manufacturing, and distribution company operated by Party City Holdco, also filed for bankruptcy on Saturday.