Party City files for bankruptcy

CNN—Party City filed for bankruptcy Saturday for the second time in less than two years.The filing comes after the retailer told employees Friday it would begin “winding down” operations. The nation’s largest party supply chain said in a statement that filing for Chapter 11 bankruptcy would “maximize value” for its stakeholders and close in the “most efficient manner.”Party City employees received letters on Friday thatstores would close on February 28. In the meantime, Party City said in a statement that its stores, of which there are about 700, will remain open with “going out of business” sales while supplies last. About 95% of the company’s 12,000 employees will be retained, the company reported.“It has been a true pleasure to be a part of your most special moments over the years. And, in the coming weeks, we hope you stop by to say goodbye and pick up your favorite items, whether you’re organizing a big celebration now or planning ahead for milestone moments to come,” according to acompany statementin the filing.Party City did not respond to CNN’s request for comment.The New Jersey-based company faced inflationary pressures on product costs, which reduced consumer spending, according to CEO Barry Litwin. Coupled with other factors, like its $800 million outstanding debt, it filed for its second bankruptcy.Party City Holdco Inc. previouslydeclared bankruptcyin January 2023 after struggling to pay off its nearly $1.7 billion debt. It was eventually able to slash nearly $1 billion and closed more than 80 locations between the end of 2022 to August 2024, according to its most recent financial documents. Party City appointed Litwin to serve as CEO in August and was able to exit bankruptcy a month later.In its latest filing, Party City said it made “exhaustive efforts” to find a path forward that would allow for continued operations.“It’s really important for you to know that we’ve done everything possible that we could to try to avoid this outcome,” Litwin told corporate employees Friday in a meeting viewed by CNN. “Unfortunately, it’s necessary to commence a winddown process immediately.”The company has faced competition from e-commerce sites and pop-up supply concepts likeSpirit Halloween. Big box retailers have alsocrushed smaller chains.Major chains are on track to close the highest number of stores for a year since 2020, according to Coresight Research. On Thursday,Big Lots announcedit was starting “going out of business” sales at all of its locations after a plan for a private equity firm to rescue it from bankruptcy failed.CNN’s Emmy Abbassi contributed to this report.