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Chapter 7 Bankruptcy

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Did Party City File for Bankruptcy? The Complete Story Behind the Store Closures

Did Party City File for Bankruptcy in 2024?

Yes, did Party City file for bankruptcy is a question with a definitive answer – the party supply retailer filed for Chapter 11 bankruptcy protection on December 21, 2024, marking its second bankruptcy filing in less than two years. This latest filing came alongside the announcement that Party City would wind down operations and close all approximately 700 stores nationwide by February 28, 2025.

The company told employees on Friday, December 20, 2024, that it would begin “winding down” operations immediately, with CEO Barry Litwin explaining to corporate staff that “we’ve done everything possible that we could to try to avoid this outcome.”

When Did Party City File for Bankruptcy?

Party City’s bankruptcy journey began in January 2023 when the company first filed for Chapter 11 protection while carrying nearly $1.7 billion in debt. The retailer managed to restructure and emerge from bankruptcy in October 2023, eliminating nearly $1 billion in debt and closing more than 80 underperforming locations.

However, the recovery proved short-lived. Just 14 months after emerging from Chapter 11, Party City found itself back in bankruptcy court, this time opting for liquidation rather than reorganization. The company’s debt obligations at the time of the second filing totaled approximately $400 million.

Why Did Party City File for Bankruptcy?

Multiple factors contributed to Party City’s financial downfall, making the question “did Party City file for bankruptcy” almost inevitable:

Increased Competition: Party City struggled to compete with retailers like Spirit Halloween and mass merchants such as Amazon, which offered similar party supplies often at lower prices. The rise of e-commerce fundamentally changed how consumers shop for party supplies.

Declining Sales Performance: Between July 2023 and July 2024, Party City’s comparable store sales fell 9.5%, while sales in its consumer products division declined 24.8%. These steep declines severely impacted the company’s ability to service its debt and maintain operations.

Private Equity Debt Burden: Like many retailers, Party City struggled to manage the debt load inherited from its period of private equity ownership, which limited its ability to invest in necessary technology and store improvements. For detailed information about Chapter 11 bankruptcy proceedings, the U.S. Courts provides comprehensive guidance on the reorganization process.

Store Closure: What Happens After Party City Filed for Bankruptcy?

Following the bankruptcy filing, Party City began going-out-of-business sales at all locations, with stores scheduled to close permanently by February 28, 2025. The company retained approximately 95% of its 12,000 employees during the liquidation process to facilitate the orderly wind-down.

Gordon Brothers was hired to assist with the liquidation process, overseeing the sale of remaining inventory and assets. Current sales offer discounts up to 75% off remaining merchandise. The Securities and Exchange Commission (SEC) provides valuable resources for understanding how bankruptcy affects publicly traded companies and their stakeholders.

Market Impact: How Did Party City File for Bankruptcy Affect Retail?

Party City’s closure represents a broader trend in retail challenges. The company epitomizes issues affecting many retailers in 2024, including debt management problems and failure to invest in technology improvements that modern consumers expect.

2024 proved particularly challenging for U.S. retailers, with more than 7,100 store closures through November 2024 – a 69% increase from the previous year. Other notable bankruptcies included Big Lots, The Container Store, and Red Lobster.

Recovery Efforts: Bankruptcy Solutions?

Before filing for bankruptcy, Party City implemented various recovery strategies, including an inventory management initiative to reduce stock from $450 million to $300 million over approximately one year. However, these efforts required selling inventory at reduced margins, which further weakened the company’s financial position.

The company made “exhaustive efforts” to find alternatives that would allow continued operations, but ultimately determined that liquidation was the only viable path forward. For businesses considering bankruptcy options, the Small Business Administration (SBA) offers guidance on alternatives to bankruptcy and recovery strategies.

Get Help Now: Concerned About Bankruptcy?

If you’re facing financial challenges similar to those that caused Party City to file for bankruptcy, don’t wait until it’s too late. The experienced bankruptcy attorneys at BankruptcyAttorneys.net can help you explore your options and protect your business or personal assets. Contact us today for a free consultation to discuss how bankruptcy protection might provide the fresh start you need.

Frequently Asked Questions

Party City filed for Chapter 11 bankruptcy protection on December 21, 2024, in the U.S. Bankruptcy Court for the Southern District of Texas.

Party City filed for bankruptcy twice – first in January 2023 and again in December 2024, marking two filings in less than two years.

Party City stores remain open during liquidation with going-out-of-business sales, but all locations are scheduled to close permanently by February 28, 2025.

Party City filed for bankruptcy due to increased competition from Amazon and Spirit Halloween, declining sales, and an inability to manage debt while investing in necessary technology improvements.

While the corporate chain is liquidating, several Party City franchisees have indicated plans to keep some locations operating independently in states like Hawaii and Virginia.

Key Takeaways

  • Party City filed for Chapter 11 bankruptcy twice in less than two years (2023 and 2024) 
  • The second filing in December 2024 resulted in complete liquidation and store closures 
  • Competition from Amazon and Spirit Halloween significantly impacted sales 
  • Heavy debt burden from private equity ownership limited investment capabilities 
  • All 700 stores closed by February 2025, ending nearly 40 years in business

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