Party City has filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Southern District of Texas. The company, formally Party City Holdco Inc. or PCHI, said the move is part of an attempt to restructure and reduce the company’s debt.
On Tuesday, the Woodcliff Lake-based retailer entered into an agreement with an ad hoc group of holders of more than 70% of the company’s senior secured first lien notes to support an expedited restructuring that would substantially reduce PCHI’s debt and optimize its capital structure and liquidity.
Additionally, the company said it secured a $150 million bankruptcy loan and will seek approval to use half of those funds to immediately pay wages and vendors, among other expenses.
The company’s subsidiaries outside of the U.S., its Party City franchise stores and its Anagram business are not part of the Chapter 11 proceedings.
“In the face of pandemic headwinds, a global supply chain crisis and other macroeconomic challenges that have faced our industry, we have made significant strides in PCHI’s ongoing transformation — establishing a solid foundation for long-term growth and continued success as the market leader in the celebrations space,” Brad Weston, CEO of PCHI said. “Today’s action to strengthen PCHI’s balance sheet will bolster our ability to further advance our strategic priorities and continue to innovate and elevate the customer experience.”
Weston added: “As we take this important step to put our business on stronger financial footing for the future, we are as committed as ever to inspiring joy by making it easy for our customers to create unforgettable memories. We appreciate the commitment of our team members and the continued support of our partners as we further enhance our position as the ‘go to’ one-stop-shop for celebrating life’s special moments.”
The restructuring is expected to be completed in the second quarter.
