Party City Emerges After Prearranged Bankruptcy

Paul, Weiss represented Party City Holdco Inc., one of the largest party good retailers in North America, and certain domestic subsidiaries, in Party City’s successful prearranged bankruptcy. New Jersey-based Party City filed for chapter 11 protection in January, and the U.S. Bankruptcy Court for the Southern District of Texas approved the company’s restructuring plan in early September.

Under the plan negotiated with a bondholder group, Party City substantially strengthened its capital structure by eliminating approximately $1 billion in debt; enhanced its liquidity with a new $562 million asset-backed exit facility and $75 million in new capital to fund future operations and distributions; optimized its portfolio of retail store locations; and negotiated more favorable lease terms. The company’s new shareholders include the members of the ad hoc group of senior secured first lien noteholders who supported its restructuring.

The Paul, Weiss team included, among others, restructuring partners Ken Ziman, Christopher Hopkins and Paul Basta, and counsel Diane Meyers; tax partner Robert Holo and counsel Anne McGinnis; litigation partners William Clareman, Elizabeth Sacksteder, Geoffrey Chepiga and Lewis Clayton, and counsel Aaron Delaney; corporate partners Robert Schumer, David Huntington and Jeffrey Marell, and counsel Lyudmila Bondarenko, Christopher Dickson and Adam Longenbach; intellectual property partner Claudine Meredith-Goujon; executive compensation partner Lawrence Witdorchic and counsel Lisa Krausz Eisenberg; and real estate partner Harris Freidus.