Bankrupt specialty retailer Party City has found a buyer.

During a Feb. 6 auction, party goods supplier New Amscan PC LLC emerged as the tentative winner for most of Party City’s intellectual property and related wholesale operating intangible assets, as well as “a significant portion” of the brand’s real estate lease portfolio.

The Woodcliff Lake-based chain announced a stalking horse agreement last month with New Amscan. The buyer is an affiliate of Ad Populum, a Santa Monica, Calif.-headquartered designer and wholesaler of gifts, home accents, costumes and collectibles.

Since a more attractive offer came through before the Feb. 4 deadline, an auction took place two days later. According to Party City, New Amscan’s prevailing bid of $20 million comprises $16 million in cash and additional consideration.

Party City noted the total represents twice the value of the stalking horse bid and followed “robust bidding.”

“As previously announced, Ad Populum intends to lead a transformation of the Party City and Amscan brands, leveraging its strengths in sourcing and distribution to preserve and build upon PCHI’s legacy in the multibillion-dollar party supply industry,” Party City said in a press release.

The chain did not specify how many of its nearly 700 stores the transaction includes. A media representative did not immediately respond to a request for more information.

The sale is subject to approval by U.S. Bankruptcy Court for the Southern District of Texas, the venue where Party City filed for Chapter 11 in December 2024. A court hearing is scheduled for Feb. 26.

Closing time

The auction came less than two months after Party City declared bankruptcy for the second time in two years.

The retailer listed assets of between $1 billion to $10 billion, along with liabilities of $1 billion to $10 billion, according to last month’s bankruptcy petition. Party City also said it has between 10,000 and 25,000 creditors.

Founded 38 years ago in East Hanover, Party City was considered the largest retailer of party goods in the U.S., Canada and Mexico.

When the company filed for bankruptcy protection in January 2023, it had about 820 stores – 770 owned – and about $1.8 billion in debt. As part of its restructuring agreement, the retailer wiped away nearly $1 billion in debt, renegotiated lease terms and closed more than 60 underperforming locations.

After exiting bankruptcy in September 2023, the company came out of the process with a reduced footprint of 750 stores, strengthened capital structure and improved liquidity. However, it still had a debt load of more than $800 million, which dragged down profits and strained liquidity.

In its latest bankruptcy petition, Party City said if its assets don’t sell, the company expects to liquidate all retail stores and wholesale inventory locations.

Closing sales are currently underway at stores and will continue through the end of this month.

Party City closed its headquarters in December less than 24 hours before filing for Chapter 11.

In its Feb. 7 press release, Party City said the recent lease auction process resulted in $14.5 million of gross proceeds and has the “potential for additional value to be generated.” According to the retailer, efforts are continuing to sell off its brick-and-mortar fleet nationwide.

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• The Container Store exits Chapter 11
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