Party City Cleared to Exit Bankruptcy With $1 Billion Debt Reduction

A U.S. bankruptcy judge on Wednesday approved Party City Holdco’s Chapter 11 bankruptcy plan, which will cancel about $1 billion in company debt and turn all of its equity value over to the retailer’s lenders.

Party City attorney Ken Ziman said at a court hearing in Houston that the party supplies retailer will emerge from bankruptcy as a stronger business, closing just a “handful” of its approximately 800 stores and preserving thousands of jobs.

U.S. Bankruptcy Judge David Jones signed off on the restructuring deal while acknowledging the poor outcome for individual shareholders whose shares will be wiped out. Party City simply could not repay all of its $1.4 billion in pre-bankruptcy debt and have money left over for shareholders, according to the judge.

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