Party City was a US party-supply retailer operating approximately 800 stores across North America. The company carried over $1 billion in debt, much of it from a leveraged buyout structure. When the pandemic disrupted celebrations — birthdays, graduations, weddings — the revenue that serviced that debt disappeared.
On 17 January 2023, Party City filed for Chapter 11 bankruptcy. The company secured $150 million in financing and completed a reorganisation on 6 September 2023 that eliminated over $1 billion of debt. Most stores were expected to stay open.
The reprieve lasted fifteen months. By December 2024, the company was running out of cash at multiple locations and filed for Chapter 11 a second time. This time there was no reorganisation: the plan was liquidation. Nearly 700 store locations across 45 states were auctioned. All corporate-owned US stores closed by 28 February 2025.
Dollar Tree acquired 150 leases; Five Below took 40. The intellectual property and wholesale operations were sold for $20 million to an affiliate of Ad Populum, forming New Amscan. Lease auctions generated about $14.5 million. PartyCity.com returned online in June 2025 under new ownership. The 800-store chain that had supplied America's birthday parties for decades was dismantled in two years.
The company's $1 billion-plus debt and 700 stores liquidated in the second bankruptcy, with lease auctions generating about $14.5 million and IP sold for $20 million.
Over $1 billion in debt from a leveraged buyout required continuous celebration spending to service; a pandemic that cancelled parties removed the revenue base
The first Chapter 11 eliminated the debt but did not fix the underlying problem: a single-category retailer in an era of Amazon and dollar-store competition
Fifteen months between the first and second filing was not enough to rebuild traffic; the brand had already lost its reason to visit in person
The second filing was a liquidation, not a restructuring — the market had spoken, and no amount of debt reduction could make 800 party-supply stores viable
A leveraged buyout loads debt onto a business that must keep growing. When the category shrinks, the debt stays. The first bankruptcy fixes the balance sheet; it cannot fix the model.
FOLLOW THE EVIDENCE