Big Retailer That Declared Bankruptcy Will Survive, Only Close Some Stores
By Dave Basner
September 7, 2023
Many retailers are suffering financially this year - Sears, Pizza Hut, CVS, Walgreens and Boston Market are all closing down stores and restaurants as a cost-cutting measure, while major national chains like Bed, Bath & Beyond, Tuesday Morning and Christmas Tree Shops have succumbed to the challenging climate, declaring bankruptcy and shuttering all of their locations. However, bankruptcy is not a death sentence, as one company that filed for Chapter 11 this year is proving.
Citing high inflation, impacts of the pandemic and a shortage of helium for balloons, Party City filed for bankruptcy back in January, but this week, a judge approved the plan the country's largest retailer of party goods presented. It will see $1 billion of debt cancelled and all of the company's equity value given over to its lenders, but because of the moves, Party City will live on.
Party City's attorney told Reuters that as part of the plan, some stores will have to be closed, but it will just be a "handful" of their 800 locations. It's good news for the thousands of employees who will remain in their positions. The plan, however, is bad news for individual shareholders in the company, who will see their shares wiped out since the company can't repay it's $1.4 billion debt and have anything leftover for investors. Explaining the situation, the judge in the case stated, "The math is what the math is. It's one of those things where there simply is not an alternative."
The company is now estimated to be worth $450 to $750 million dollars. No word yet on which stores will be closing.