(Reuters) -Party City Holdco Inc filed for Chapter 11 bankruptcy protection on Tuesday, making it the latest casualty in the U.S. retail industry as persistently high inflation takes a toll on consumer spending.
Troubled retailers often seek bankruptcy protection following the holiday season to take advantage of the cash cushion provided by recent sales.
Bed Bath & Beyond Inc (NASDAQ:BBBY) raised doubts about its ability to continue as a going concern earlier this month.
Woodcliff Lake, New Jersey-based Party City said it had reached a pre-negotiated agreement with a bondholder group to support an "expedited restructuring" that is expected to be completed in the second quarter.
It reported $1 billion to $10 billion of estimated assets and liabilities, and said it had obtained $150 million in debtor-in-possession financing to support its operations.
The party supplies retailer's fortunes have dwindled since the COVID-19 pandemic as it wrestled with slowing sales due to lockdowns and store closures, along with inventory shortages and tight supplies of helium due to global supply chain disruptions.
The company, which operates more than 800 company-owned and franchise stores throughout North America, also battled higher freight, labor and raw materials costs as it pulled forward shipping timelines to ensure enough products on its shelves.
Its subsidiaries outside of the United States, its franchise stores, and its Anagram business were not part of the bankruptcy proceedings, the company said, adding that its stores would continue to remain open.
Shares of the party goods company were up about 11% at 41 cents before being halted premarket on Wednesday. The stock fell as much as 57% on Jan. 6 after the Wall Street Journal reported that the company could file for bankruptcy within weeks.