Why did Party City file for bankruptcy twice?

Party City's rapid double-bankruptcy illustrates a recurring retail pattern: the first filing (January 2023) eliminated debt but could not fix the fundamentally challenged business model facing helium supply shortages, post-COVID normalization, and competitive pressure from Amazon and dollar stores. The company emerged in September 2023 but re-filed just four months later.

What tenants are replacing Party City in former locations?

The 10,000 to 15,000 SF Party City format accommodates a wide range of replacements including urgent care and medical offices (often investment grade health systems), Five Below and value variety retailers, beauty concepts like Ulta and Sally Beauty, food and beverage operators, and pet supply specialists.

Party City Credit Rating & NNN Status

Metric	Details
Entity Status	Liquidated — Second Chapter 11 January 2024
First Chapter 11	January 2023 (reorganized, emerged September 2023)
Second Chapter 11	January 2024 (liquidation)
All Stores Closed	All ~800 US locations closed by March 2024
Brand Status	IP acquired; online party supplies operations only
Pre-Bankruptcy S&P / Moody’s	CCC+ / Caa2 (deeply distressed before final filing)
Investment Grade Status	Liquidated — No longer a NNN tenant
Former Typical Building Size	10,000–15,000 SF

What Happened to Party City?

Party City executed one of the fastest double-bankruptcies in retail history. The company filed Chapter 11 for the first time in January 2023, citing helium supply shortages, post-COVID normalization of party spending, and its heavily leveraged balance sheet from an earlier private equity buyout. The company emerged from the first bankruptcy in September 2023 with reduced debt — but the operational challenges that caused the first filing remained unresolved.

Just four months after emerging from the first bankruptcy, Party City filed Chapter 11 for the second time in January 2024 and moved immediately to a full liquidation. All approximately 800 US store locations were closed and inventory liquidated by March 2024. The brand and intellectual property were subsequently acquired for online party supplies operations, but the physical retail chain is permanently gone.

Double-Bankruptcy Lesson: Party City’s rapid double-bankruptcy illustrates a pattern that has recurred across retail: a first bankruptcy eliminates debt but cannot fix a fundamentally challenged business model, competitive position, or consumer trend. The four-month gap between emergence and re-filing was a warning sign visible in hindsight — the company emerged with a lighter balance sheet but the same helium dependency, the same competitive pressure from Amazon and dollar stores, and the same secular decline in physical party supply retail. Active credit monitoring of post-bankruptcy tenants is essential for NNN investors who hold positions through restructuring events.

Former Party City Properties: Re-Tenanting Considerations

The 10,000 to 15,000 SF Party City strip and power center format is among the most re-tenantable sizes in retail — comparable to the Kirkland’s and Jo-Ann formats. This size range accommodates a very broad range of replacement concepts. The speed of Party City’s final liquidation (January to March 2024) means that most former Party City spaces have already been re-tenanted or are well into the re-tenanting process by Q1 2026.

Replacement Category	Format Fit (10–15K SF)	Credit Quality
Urgent care / medical	Excellent	Often IG health systems
Five Below / value variety	Excellent	Private / NR
Beauty (Ulta, Sally, Great Clips)	Excellent	Varies
Food & beverage / QSR	Good	Varies
Pet supplies specialty	Good	Varies
Fitness (Planet Fitness)	Moderate — prefers 15–20K SF	BBB‑/B3

Did Party City go out of business?

Yes. Party City filed Chapter 11 for the second time in January 2024 and liquidated all approximately 800 US stores by March 2024. The company is no longer an active physical retailer. The brand IP was acquired for online operations only.

What happened to Party City NNN leases?

All Party City leases were rejected through the second Chapter 11 process. Property owners became unsecured creditors and received their properties back vacant. The 10,000 to 15,000 SF strip center format has proven highly re-tenantable with healthcare, beauty, value retail, and food and beverage concepts.

Own a Former Party City Property? We Can Help.

If your former Party City space is already re-tenanted, we can help you evaluate the current credit quality and consider disposition or 1031 exchange options. If you are still working through re-tenanting, we connect property owners with the right replacement tenant categories.

Talk to a Retail NNN Specialist →

In a 1031 exchange? Tell us your timeline — we move faster.

Related NNN Tenants

Own multiple Party City properties? Considering an off-market sale?

Investment Grade represents owners on confidential disposition of Party City portfolios and individual properties through off-market direct-to-principal distribution to specialty REITs, private equity funds, and family offices. Party City buyer demand runs deep, and portfolio sales consistently produce stronger pricing than sequential individual sales because the institutional buyer pool is structured around portfolio acquisition.

For multi-property owners considering a portfolio disposition, see Selling Investment Grade NNN Off-Market: Tenant-by-Tenant Buyer Demand. For the full off-market framework covering individual property dispositions, sale-leasebacks, and 1031 coordination, see Off-Market CRE Sales: The Complete 2026 Guide.

The pre-listing conversation is at no cost and fully confidential. Email team@investmentgrade.com or see contact Investment Grade.