Party City Considers Second Bankruptcy, A Year After First

Party City Holdco Inc. is exploring options, including a sale or a potential second bankruptcy filing, just over a year after emerging from Chapter 11 protection, Reshmi Basu and Eliza Ronalds-Hannon reported for Bloomberg News.

Party City’s financial struggles stem from years of declining sales, which have made it difficult to manage its substantial debt. I Photo: Harrison Keely Wikimedia Commons

The New Jersey-based retailer, known for selling balloons and party supplies, is behind on rent at some locations and running out of cash to maintain operations, according to sources familiar with the matter.

Party City’s financial struggles stem from years of declining sales, which have made it difficult to manage its substantial debt.

In 2023, the company entered bankruptcy with about $1.8 billion in debt. Lenders, including Monarch Alternative Capital and Silver Point Capital, assumed ownership after Party City emerged from bankruptcy and reduced its debt by $1 billion.

However, the retailer retained over $800 million in debt, which has continued to strain its profitability and liquidity.

Despite avoiding liquidation during its first bankruptcy—unlike peers such as Bed Bath & Beyond Inc.—Party City’s lingering financial challenges may now force it into a second restructuring or sale.