Party City Holdco Inc. is in the post-effective-date administration of a confirmed liquidating trust, with Liquidating Trustee Elizabeth LaPuma working through omnibus claims objections roughly nine months after the plan took effect on September 22, 2025.
The December 21, 2024 Chapter 11 petitionsDkt. 1 marked Party City's second bankruptcy filing in roughly fourteen months. The company had emerged from its first Chapter 11 in October 2023 after eliminating approximately $1 billion of debt, but the restructured capital structure — a ~$149 million JPMorgan-administered ABL facility, a ~$13 million FILO facility, and ~$268 million of 12.00% second lien PIK toggle notes held by an ad hoc noteholder group that owned 97%+ of the equity — could not absorb the operating decline that followed. Per the declaration of Chief Restructuring Officer Deborah Rieger-PaganisDkt. 45, comparable store sales fell 9.5% and consumer products division sales fell 24.8% between July 2023 and July 2024, while competition from Spirit Halloween and the mass merchants compressed margins. A failed capital raise in September 2024, an ABL borrowing-base contraction, a $50 million discretionary reserve imposed by the lender in November 2024, and a liquidity covenant breach on December 10, 2024 pushed the debtor toward a liquidation rather than a restructuring outcome.
From the outset the case was run as a going-out-of-business wind-down rather than a reorganization: the debtors operated on cash-collateral authority and never sought a DIP loan, closed the ~692 company-owned stores, marketed IP and inventory, and moved toward a liquidating trust. The debtor filed its original plan in June 2025 and an that became the operative plan. The structure channels all remaining assets into a Liquidating Trust under a trustee selected by the ad hoc noteholder group and the creditors' committee, with a distribution waterfall that first carves out $5 million for administrative and priority claims, then $9.8 million split between administrative/priority claims and the second lien notes, with the residue running to the second lien notes; a separate $1 million general unsecured distribution precedes any excess to the GUC class. The plan was confirmed on August 27, 2025 and became effective September 22, 2025.
The current docket is now claims-objection driven. In mid-June 2026 the Liquidating Trustee filed three successive omnibus objections: the Ninth Omnibus Claims ObjectionDkt. 2043 seeking to reduce five administrative lease claims that included post-rejection rent or had already been cured; the Tenth Omnibus Claims ObjectionDkt. 2045 moving to disallow 23 claims for insufficient documentation; and the Eleventh Omnibus Claims ObjectionDkt. 2047 seeking to reclassify misclassified Section 503(b)(9) claims as general unsecured. Each track runs under the objection-procedures order entered in May 2026 with 30-day response windows, and together they represent the principal remaining contested work as the trust cleans up the claims register and advances toward distributions.
