Nearly two years after seeking bankruptcy protection, Party City is reportedly mulling another Chapter 11 filing.

Citing sources familiar with the matter, Bloomberg reported that the Woodcliff Lake-based specialty retailer is behind on rent at some locations and running out of cash for operations.

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, the outlet reported.

A spokesperson for Party City did not immediately respond to a request for comment.

In August, Party City tapped Barry Litwin, a retail industry veteran with turnaround experience, as its new president and CEO.

Litwin arrived about nine months after Party City exited Chapter 11 with a reduced footprint of 750 stores, strengthened capital structure and improved liquidity.

Party on?

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, owning 770 of them, 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.”

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.”

Ahead of Halloween, Party City began lowering prices on more than 2,000 popular party supplies, like balloons, disposable tableware, candy and favors. The retailer said it was aiming to make products more budget friendly for consumers planning upcoming celebrations. 

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.