The U.S. Bankruptcy Court for the Southern District of Texas has approved Party City’s restructuring plan, which entails debt reduction and private ownership. The retailer’s parent company, Party City Holdco, filed for Chapter 11 protection in January with much of the plan already formed.
The company exits bankruptcy with debt reduced by nearly $1 billion, according to a company press release and court documents. The plan also provides for an exit ABL facility of $562 million and a fully backstopped $75 million investment, which will fund administrative claims and company operations.
New shareholders include members of the ad hoc group that supported the restructuring and now holds Party City’s senior secured first lien notes. The retailer runs nearly 800 stores nationwide, after renegotiating leases and closing less productive locations through the Chapter 11 process, per Wednesday’s release.
Let the party begin, again.
Rising costs, a helium shortage and the pandemic-induced hold on gatherings took a toll on Party City, which offers a wide assortment of goods like costumes, balloons and decorations.
Party City Holdco operates in more than 70 countries, including “multiple businesses within its Retail Division and Consumer Products Division.” Its retail side includes e-commerce, franchise stores and Halloween City (halloweencity.com) seasonal pop-up stores. Its consumer products division includes two design and manufacturing entities, Amscan, which makes décor, tableware, costumes and accessories, and Anagram, which makes foil balloons.
In North America, Party City is the largest vertically integrated designer, manufacturer, distributor and retailer of party goods, according to the company’s press release. The bankruptcy court’s approval of its exit plan Wednesday allows the retailer to look beyond survival, according to a statement from Brad Weston, chief executive of Party City Holdco.
"Today's Plan approval is an important milestone in completing our financial restructuring and successfully positioning PCHI for the future," he said. "With our debt substantially reduced and Party City store portfolio optimized, we will emerge better positioned to advance our strategic priorities, continue to innovate and elevate the consumer experience, and pursue new growth opportunities. We thank our team members, retail and wholesale customers, suppliers, and landlords for their support and collaboration during this process, and we are excited to build on PCHI's proud history as the leader in the celebrations space."