In the closing stages of Party City's operations
In the closing stages of Party City's operations
Every year, the trip was planned to span 12 days. However, in 2024, it was abruptly cut short, lasting only two days.
Various individuals participating in the trip who chose to remain anonymous out of fear of retribution or damage to their reputation discussed the situation with CNN. They revealed that on December 4, 2024, Party City's management in the United States advised its team in China, who had only just arrived on December 2, to book the earliest return flights home. This was due to Party City's failure to fully settle its payments to its vendors. The company was on the brink of bankruptcy once again, and within a few weeks, it was expected to announce its plans to liquidate its entire business.
In an email sent on December 4, 2024, a senior leader from the United States addressed a team member in China, acknowledging the financial strain on its suppliers. The email suggested a premature end to the trip, allowing the team members to reschedule their return flights for Thursday or Friday.
Upon receiving this news, the team was taken aback and pressed for answers, which they claimed were not forthcoming. They departed for Hong Kong on Thursday and shortly returned to the United States the following day.
Representatives from Party City, its liquidator, and its legal team did not respond to requests for comment. Party City's corporate offices have been permanently shut down, while its stores continue to operate, selling off merchandise under the supervision of a liquidator.
Party City emerged from bankruptcy in October 2023, pledging to reduce its debt and improve its financial stability. The company reportedly had a successful Halloween, according to multiple employees cited by CNN.
In recent meetings with the new CEO, Barry Litwin, who joined Party City in August 2024, there was no indication that the company was imminently on the verge of closure, employees present at the meetings revealed to CNN.
Nonetheless, several members of the team heading to China reportedly questioned management about the safety of traveling to meet with vendors who had become accustomed to delayed or missed payments for their shipments.
Party City had defaulted on its vendor payments three times in just under 16 months, due to bankruptcy, a failed partnership, and recent financial difficulties, as stated by one employee who was part of the trip.
Despite these concerns, Party City reassured them it was safe to travel.
‘It was terrifying’
However, Party City had not been making full payments to some of its vendors for several months, as evidenced by emails obtained by CNN. In one instance, a Chinese costume vendor demanded full payment as early as September 7, 2024.
“You have provided us with all the orders on time. You will make your money as you have received your costume shipments,” stated a Festival employee in an email to Party City on September 7, 2024. “50% of the payment is insufficient to cover even the basic cost of raw materials payments.”
In November, other vendors also demanded payment for merchandise that had been delivered but remained unpaid, as detailed in emails shared with CNN. One participant on the China trip accused Party City of knowingly endangering the team by failing to address these pressing financial issues.
“This was disgraceful. I can't find a better word for it. I just can't sit back and say this is acceptable. It was terrifying. We left our families for this company, and you sent us there, and then you abandoned us,” a senior employee who participated in the China trip told CNN.
Other Party City Chinese counterparts urged the American team to leave the country as well, once they noticed the company's warning to the visiting staff.
“One of our agents in China advised us to leave immediately,” a team member who attended the trip told CNN. “He said ‘I think you should leave the country and not spend another night. It doesn't sound good. It's risky.’"
However, Party City provided little assistance in facilitating their return flights. The team was forced to arrange their own departures, and the company offered limited guidance on how to communicate with its Chinese vendors regarding the sensitive issue.
“We received an email without any direction on how to return home or assistance,” the team member said, while also sharing emails that seemed to support their claim.
In an email sent to management, the team member requested clarification but claimed to have received no responses. The company reimbursed the employees for their travel expenses, after they had personally arranged for flights and covered incidental costs.
“We asked for reasons for our departure, and no one could provide answers,” one team member explained. “We had to take care of the logistics for our own return flights, hotels, and other travel arrangements. No one stepped forward to offer assistance.”
The team also sought guidance from Party City to help mend relationships with vendors they would no longer be meeting.
“We understand that the Executive Leadership Team is unable to provide us with details. However, we require help with corporate messaging,” the team member wrote to management while in China. “We cannot inform the vendor community that corporate has ordered our departure, as they are sensitive to bankruptcy concerns.”
“We are not well-equipped to navigate this situation,” the member added in the email.
The team's concerns also included the potential impact of the Wonder Group's bankruptcy in June 2024, which had already placed strain on vendors associated with Party City. The costume factories that Party City collaborated with suffered financial losses due to Wonder Group's bankruptcy.
"An employee associated with the joint venture encountered life threats following its bankruptcy, and they're urging us for clarifications. The Hong Kong team is currently apprehensive about the cancellation of our trip," an employee wrote to management, as seen by CNN.
On a Friday, while at the airport lounge waiting for their departure, another employee, seeking anonymity, described a scene of tears and anxiety.
Upon their return home on December 6, they were the initial ones to be told by Party City to work from home until the end of the year. There was no additional communication or explanation, the employees affirmed.
The Festivities Come to a Halt
On December 10, the rest of the staff received the work-from-home directive for the remainder of 2024. The company had intimated to some teams but not all, advising them to work remotely out of concern for their safety.
Yet another employee, not part of the China trip, depicted the office environment as chaos after receiving the email. The entrance doors were locked, and there were no further details provided.
At that point, most staff members realized something was amiss at Party City. One staff member revealed to CNN that they sensed something was off in the weeks preceding the layoff announcement but had no clue about the gravity of the situation.
"It really feels like the biggest punch to the face they could've given us," expressed a Party City employee from the China trip. "No company should treat their employees this way."
On December 20, the celebration ceased. Party City announced its intention to file for bankruptcy and liquidate, resulting in the immediate termination of hundreds of corporate employees. The majority of the company's 12,000 employees working in stores would be let go once the liquidation sales concluded in late February.
Employees were informed of this development through a video conference that left them perplexed, frustrated, and caught off guard.
"It's crucial for you to comprehend that we've done everything feasible to prevent this scenario from happening," CEO Barry Litwin said during the video call. "Unfortunately, it's necessary to initiate a winddown process immediately."
Party City now faces a class-action lawsuit filed in Texas on behalf of its New Jersey employees, alleging that the company violated the WARN Act by failing to provide notice of termination and by not meeting the legal requirements for payment after the termination date. Party City has yet to respond to the lawsuit in court filings.
The employees are seeking compensation but are also grappling with feelings of betrayal and abandonment.
"The few meetings we had with them, it was always like: 'It's going to be a long journey ahead, but we're going to pull through,'" a former corporate employee, opting to remain anonymous due to the ongoing lawsuit, told CNN. "It was going to be a better company, it was going to be transformed. We knew we weren't in the best position, but there was never a hint like, 'Hey, we might not make it at all.'"
In the email sent on December 4, 2024, Party City's financial strain was acknowledged, leading to the suggestion of an early trip end for the team in China. This was due to the company's failure to fully settle its payments to vendors, putting it at risk of bankruptcy once again.
The team's departure for Hong Kong on Thursday and return to the United States the following day was precipitated by Party City's financial troubles and its decision to abruptly end the trip.