Party City to exit Chapter 11 with debt reduced by $1 billion

Party City Holdco Inc. has received the green light for its restructuring plan.

As part of a plan approved by the U.S. Bankruptcy Court for the Southern District of Texas, the party good retailer, which filed for bankrutpcy in January, will emerge with a leaner balance sheet, its debt reduced by nearly $1 billion. The company had  listed assets of $1 billion to $10 billion and liabilities in the same range in its bankruptcy petition.

Also as part of the approved plan, Party City’s equity value will be turned over to lenders who helped support its restructuring.

In a statement, the company said it will move forward with a more “profitable” Party City store footprint, consisting of nearly 800 locations nationwide, after negotiating improved lease terms and exiting less productive locations during the Chapter 11 process.  (Party City closed about 60 stores as part of the bankruptcy proceeding, according to Bloomberg News.)

The rrestructuring plan also provides for an exit asset-based loan of $562 million and a fully backstopped $75 million new-money investment, which will fund administrative claims and company operations.

“Today's plan approval is an important milestone in completing our financial restructuring and successfully positioning PCHI for the future," said CEO Brad Weston, CEO.  "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."

Court filings and other documents related to the Company's financial restructuring are available at https://cases.ra.kroll.com/PCHI. Suppliers with questions can call a dedicated hotline at (888) 905-0493 (toll-free) or +1 (646) 440-4580 (international) or email [email protected].

Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel, Moelis & Company LLC is serving as investment banker, AlixPartners, LLP is serving as financial advisor, and A&G Realty Partners is serving as real estate advisor to the company.

Davis Polk & Wardwell LLP is serving as legal counsel and Lazard Frères & Co. is serving as investment banker to the Ad Hoc Group.