Party City Holdco Inc. (Woodcliff Lake, N.J.) said it has voluntarily filed for Chapter 11 bankruptcy to put the business “on stronger financial footing for the future.” The company’s 800 Party City stores and online sales will continue operating during the restructuring and bankruptcy.
The Chapter 11 filing is part of an agreement the retailer entered into with the holders of more than 70 percent of its senior secured, first-lien notes to support an expedited restructuring to reduce PCHI’s debt and optimize its capital structure and liquidity.
“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,” PCHI CEO Brad Weston said in a news release. “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.”
PCHI has secured a commitment for $150 million in debtor-in-possession financing from the first-line lien holders. The company said this “new money” will provide the liquidity needed to support continued operations across the company’s retail and consumer products divisions, while maintaining momentum on its transformation.
Key elements of its restructuring plan including the further conversion of Party City stores to next-generation prototypes, evolving its Halloween City pop-up stores to drive performance in this channel, building out its online shopping experience, establishing localized marketplaces to facilitate one-stop-shopping in the celebrations space, and delivering more compelling assortments and innovation for customers.
The restructuring is expected to be completed in the second quarter of 2023.