After nearly four decades in business, Party City is reportedly closing down all of its stores.

According to CNN, the Woodcliff Lake-based specialty retailer’s CEO, Barry Litwin, spoke with corporate employees during a Dec. 20 meeting, telling them the company is “winding down” operations immediately and that today is “their last day of employment.”

During the video conference call, Litwin described it as “without question the most difficult message that I’ve ever had to deliver,” per CNN. Litwin – who is regarded as a retail industry veteran with turnaround expertise – also told employees that the company’s “very best efforts have not been enough to overcome” its financial challenges.

It was not immediately clear when stores will close. A media representative for Party City did not immediately respond to a request for comment.

The news comes as Party City reportedly mulls another Chapter 11 filing. Earlier this week, sources familiar with the company’s plans told Bloomberg it could do so within the next two weeks and begin liquidating stores as part of the process. 

Earlier this month, reports surfaced that Party City was behind on rent at some locations and running out of cash.

The build-up

After emerging from bankruptcy in September 2023, Party City still had a debt load of more than $800 million, which has continued to drag down profits and strain liquidity.

Litwin took the helm of the struggling company in August, just nine months after it exited Chapter 11. The company came out of the process with a reduced footprint of 750 stores, strengthened capital structure and improved liquidity.

Founded 38 years ago in East Hanover, Party City is 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.

In taking the reins at Party City, Litwin said his priority was strengthening the organization’s financial health and that “there is work ahead of us.”

At the time, Party City Chairman Bob Hull said he and the team were “extremely confident” that Litwin’s expertise “in fostering business growth and transformation, as well as his people-focused leadership style will bring Party City to the next level.”

In September, a former Party City employee sued after she and 180 others were allegedly let go from their positions at the retailer’s corporate headquarters without notice. Before the terminations, the location had about 328 employees, according to the complaint filed in U.S. District Court for the District of New Jersey.