Party City fears second bankruptcy in two years due to shortfall in sales

(Bloomberg) — Party City Holdco Inc. is considering options such as a sale or another possible bankruptcy, a little more than a year after exiting Chapter 11, according to people familiar with the matter.

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The New Jersey-based retailer, which sells balloons and other party supplies, is behind on rent at some locations and is out of money, said the people, who spoke on condition of anonymity and discussed a private matter.

The retailer’s difficulties stem from years of declining sales that left the company unable to keep up with its significant debt load. In 2023, the company entered bankruptcy with approximately $1.8 billion in debt.

Lenders including Monarch Alternative Capital and Silver Point Capital took ownership of Party City as the company exited Chapter 11 protection, reducing its debt by about $1 billion and closing more than 60 stores. The party store, unlike some of its troubled competitors such as Bed Bath & Beyond Inc., 99 Cents Only Stores LLC and furniture retailer Conn’s, Inc., avoided liquidation.

Representatives for Party City and Monarch did not respond to requests for comment. A representative for Silver Point declined to comment.

One of the people said the bankruptcy, with more than $800 million in debt, continues to hurt profits and strain Party City’s liquidity.

(Updates to add names of recently liquidated retailers and store closures in fourth paragraph.)

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