Party City’s plan, disclosure statement hearing moved to June 1

By Sarah Lizee

Olympia, Wash., May 15 – Party City Holdco Inc.’s combined hearing on confirmation of its Chapter 11 plan and final approval of the related disclosure statement was moved to June 1 from May 17, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the company entered into a restructuring support agreement with an informal group of holders of more than 70% of Party City Holdings Inc.’s $161.7 million senior secured first-lien floating-rate notes due 2025 and Party City Holdings’ $750 million 8¾% senior secured first-lien notes due 2026.

Since entering into the RSA in January, more noteholders have joined in, bringing the total percentage of senior notes claims party to the agreement to about 97%.

The company said it is also engaged in ongoing discussions with an informal noteholders group and the official committee of unsecured creditors regarding treatment of general unsecured claims. Party City is hoping to reach a global resolution that would result in the committee’s support for the plan.

The framework of the restructuring is embodied in the plan. Among other things, the plan provides for the full equitization of about $911.7 million of secured notes claims, and a rights offering for equity in the reorganized company, which will fund repayment of non-equitizing debtor-in-possession claims and provide enough liquidity to operate post-emergence.

Under the plan, other secured claims, other priority claims and prepetition asset-based lending claims are unimpaired.

Each holder of an allowed secured notes claim will receive its pro rata share of the new common stock, subject to dilution on account of the DIP equitization shares, any new common stock issued in connection with the equity rights offering and the management incentive plan equity pool; and subscription rights to participate in the purchase of $75 million of the new common stock offering in the equity rights offering.

Each holder of an allowed general unsecured claim will receive its pro rata share of the general unsecured creditor cash allocation pool. The amount in the pool will be determined by the debtors with the consent of the required consenting noteholders and in consultation with the committee, and will be disclosed in a notice to be filed with the court at least 10 days before the voting deadline.

A redline of the plan filed on May 10 showed that the cash amount of the pool will be at least $250,000.

Intercompany claims and interests will be reinstated or canceled.

Interests will be canceled.

Party City is a Woodcliff Lake, N.J.-based supplier of decorated party goods available at more than 800 stores and online. The company filed bankruptcy on Jan. 17 under Chapter 11 case number 23-90005.

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