Party City is out of business after 40 years.

 

Party City CEO Barry Litman said it was "necessary to commence a wind-down process without delay."

A Party City store in Rockaway, New Jersey, on Sept. 6, 2019. (iStock / iStock)

Party City CEO Barry Litwin told corporate employees on a company-wide conference call Friday that it was "necessary to commence a wind-down process immediately" for the party supplies retailer, CNN reported.

In a conference call, Litwin said the company was unable to overcome the ongoing challenges facing it "despite the very best efforts." Party City "has done everything possible to try to avoid this outcome," he underscored.

Citing sources close to the matter, Party City corporate employees will be laid off following Friday. In addition, the company intends to execute mass store closures that are likely to start next month in February.

Receive Up To 50% Off Netflix Subscription

As of late October, Party City operated more than 700 company-owned and franchised stores in North America, according to a press release issued that month.

The company faced challenges such as inflation and debt, among others, which reportedly contributed to its underperformance. FOX Business reached out to Party City for comment on its plans to permanently close stores.

A Party City store in Miami on January 18, 2023. (Joe Raedle/Getty Images)

This comes nearly four decades after the company's launch and about 14 months following its exit from bankruptcy.

When Party City emerged from its Chapter 11 bankruptcy last year, it said it had "significantly strengthened its capital structure by eliminating nearly $1 billion in debt, improved its liquidity, and optimized its store portfolio by negotiating better lease terms and closing underperforming locations."

It turned the debt into equity shares to be held by its lenders.

Party City was taken off the New York Stock Exchange in January 2023 following its bankruptcy process after being listed for about eight years.

Speculations of the retailer possibly filing for bankruptcy again emerged last week.

While all corporate-owned stores will be closed, about a few dozen independently-owned Party City stores will remain open.

"The bankruptcy does not affect Local Party City franchisees," Mitesh Patel, a Party City franchisee in the Austin, Texas area, told FOX Business in an interview. "There are 29 franchise stores that will remain open and continue to serve their local communities."