Party City closes all its stores and fires company employees

Chile, Friday (December 20) seems to have been a tough day Party city Headquarters after a bomb announcement. With the holiday just days away, CEO Barry Litwin let go of everyone at the company without receiving severance pay. Why? After 40 years as the largest party supply store in the United States, Party City is closing all of its stores.

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Here’s why Party City is closing

according to CNNIn a crushing video call, Party City’s CEO said the company was “heading toward liquidation.” Operations in particular were halted immediately. Along with the layoffs, CEO Litwin informed company employees that their benefits would run out as the company ceased operations. The chief human resources officer reportedly broke down in tears while explaining this part.

Despite its “best efforts,” Litwin said Party City has not been able to resolve the financial issues. As a result, the company collapsed and was no longer able to continue. This reportedly happened when the company tried to fight inflation with higher prices. However, higher prices resulted in lower customer spending.

“It’s really important for you to know that we did everything we could to try to avoid this outcome,” Litwin said. “Unfortunately, it is necessary to begin the liquidation process immediately.”

As mentioned earlier, the biggest problem facing computers was money. Litwin joined the company as its CEO four months ago, a month after the company emerged from bankruptcy after declaring it in January 2023. At the time, Party City had about $1.7 billion in debt, about $1 billion of which was taken care of by the bankruptcy case. However, remaining debt of $800 million has weighed on their 2024 earnings.

The employees suspect trouble after these moves by the company

CNN noted that employees began to suspect that something was brewing! Two weeks ago, Party City ordered its product development team to go home for safety reasons. The company allegedly stopped paying its overseas suppliers.

In addition, all company employees were ordered to return home on December 10. The next day, Party City said in an email that employees would need to give one day’s notice to visit the office from now on.

Ultimately, though, employees reportedly claim that PC left them in the dark about the company’s financial situation. CEO Litwin addressed this in the video call. “We realize that the flow of communication has not been the way we normally handle sensitive matters like this.” Litwin said.

What’s next for store employees?

CEO Letwin told CNN that the shocking message was the “hardest” he had ever had to deliver.

However, corporate employees weren’t the only ones stunned by the news on Friday. CNN reports that some store employees also received messages about the company’s closure. Party City reportedly plans to close all stores and let go of these employees on February 28. Between 2022 and August 2024, the company closed more than 80 store locations. However, prior to this announcement, it had managed to keep more than 800 stores open.

“Although Party City believes these closures are in the best interest of the company, we regret having to take this step and thank you for your valuable contributions and service to the company.” The letter reportedly said.

This week, another major retailer, Big Lots, announced it would also close more than 900 stores.

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