The party’s over for Party City.
The New Jersey-based retailer, which had more than 850 locations globally as of August this year, will shutter all its stores after running out of money to stay in operation, according to CNN.
Barry Litwin, the company’s chief executive officer, told corporate employees on Friday that Party City is “winding down” operations immediately and that today will be their last day of employment.
“That is without question the most difficult message that I’ve ever had to deliver,” Litwin said at the meeting, which was held on a video conference call.
Litwin told his employees that Party City’s “very best efforts have not been enough to overcome” its financial troubles.
He said the company was doomed by stubbornly high inflation that sent costs soaring and deterred consumers from spending.
“It’s really important for you to know that we’ve done everything possible that we could to try to avoid this outcome,” Litwin said.
“Unfortunately, it’s necessary to commence a wind-down process immediately.”
The Post has sought comment from Party City.
Party City employees had anticipated the company’s collapse for weeks, according to CNN.
The development team was recalled from its yearly trip with vendors and told to go home immediately two weeks ago, according to a former corporate office employee who spoke to CNN.
The team was informed that the company believed the trip posed a safety risk since Party City stopped paying its suppliers.
All Party City corporate employees were sent home on Dec. 10 and security locked the front entrance of company headquarters in Woodcliff Lake, NJ.
Employees who took part in Microsoft Teams chats on Thursday were angry at management over the lack of communication regarding the recall of the product development team.
Other employees learned that store managers were informed that all Party City locations would be shuttered on Feb. 1, according to CNN.
Employees were furious since corporate executives did not mention financial troubles during recent town hall meetings.
“We recognize the flow of communication has not been how we typically handle sensitive matters like this,” Litwin said, acknowledging employee frustrations.
Karen McGowan, the company’s chief human resources officer, broke down in tears several times on a video conference call in which she detailed severance and other benefits that would be extended to employees, CNN reported.
“I certainly know this is a lot to take in,” McGowan said before she paused and teared up.
“My apologies.”
The company had considered filing for bankruptcy a second time earlier this month after initially filing for it last year as it struggled to pay rent at some locations.
Party City, which is known for selling balloons and other party supplies, first filed for Chapter 11 bankruptcy protection in January last year, with $150 million in debtor-in-possession financing to support its operations and reported $1 billion to $10 billion of estimated assets and liabilities.
In September, the retailer reached a plan to exit bankruptcy, which saw a cancellation of about $1 billion in company debt and turned all its equity value over to the retailer’s lenders.
Troubled retailers often seek bankruptcy protection following the holiday season to take advantage of the cash cushion provided by recent sales.
After exiting bankruptcy, it hired Litwin as CEO. He wrote that his “main priority is to strengthen our financial health, and there is work ahead of us.”
Credit: Source link
