On the Sunday after Thanksgiving 2024, six members of Party City’s product development and sourcing teams left New Jersey for their annual trip to mainland China to meet with the company’s suppliers, who make practically everything the party store sells – from the mylar balloons at the front of the store to the aisles upon aisles of birthday, graduation and Halloween party decorations at the back.
Like every year, the trip was scheduled to last 12 days. In 2024, it lasted just two days.
CNN spoke to multiple people who were sent on the trip and who requested anonymity for fear of retribution or reputational damage. They said that on Wednesday, December 4, Party City’s management advised its American team in China – who had just arrived on Monday – to catch the next available flight home. Party City hadn’t paid its vendors in full. It was about to go bankrupt again, and in just a matter of weeks, it would announce plans to liquidate its entire business.
“I know you are both aware of the supplier pressure we’re facing,” a senior leader in the United States wrote in an email on December 4 to a team member visiting China.
“In light of our purchase plans being re-evaluated, I raised the topic at an ELT (Executive Leadership Team) meeting this morning, and we think it’s appropriate for you to cut your trip short. To that end, feel free to change everyone’s return flights to Thursday or Friday, whichever is more convenient for you.”
The team was stunned and demanded answers – which they said were not forthcoming. They left for Hong Kong Thursday and flew back to the United States the next day.
Party City, its liquidator and its legal representatives did not respond to requests for comment. The company’s corporate offices have been shut down. Stores remain open, operated by a liquidator, as they sell off merchandise.
Party City emerged from bankruptcy in October 2023 with the promise of shedding massive amounts of debt and getting financially healthier. The company had told employees that it had a reasonably strong Halloween, multiple company employees told CNN.
And in recent meetings with new CEO Barry Litwin, who took over in August 2024, the company never let on that it might be close to shutting down for good, employees in attendance told CNN.
Still, members of the team heading for China said they asked management repeatedly if it was safe to travel to meet face-to-face with vendors who had become accustomed to receiving late or missing payments for their shipments.
Party City had failed to pay some of its vendors three times in less than 16 months, because of its first bankruptcy, a failed partnership and recent financial issues, according to one employee who was on the trip.
The company kept telling them it was safe to travel.
‘It was scary’
But Party City hadn’t been paying some of its vendors in full for several months, they said. In emails viewed by CNN, several vendors had been demanding payments as far back as September.
“We have provided you all your orders in due time. You will make your money as you got your costumes,” an employee of Chinese costume vendor Festival wrote to Party City on September 7.
“50% of payment is obviously not enough to recover even only raw materials payments.”
Several other companies in November demanded compensation for goods that they had shipped but were never paid for, according to emails shared with CNN. One Party City employee sent to China said they believe the company knowingly put the team in harm’s way.
“This was disgraceful. Don’t know how else to say it,” a senior employee who was on the China trip told CNN. “I just can’t sit back and say this is OK. It was scary. We left our families for this company, and you sent us there and you left us out to dry.”
They weren’t alone: Party City’s Chinese counterparts were also advising the American team to leave once they saw the company’s advisory to the visiting staff.
“One of our agents in China suggested we leave immediately,” an employee who was on the trip told CNN. “He said ‘I think you should leave the country and not stay another night. It doesn’t sound good. It’s risky.’”
The employee said, however, that Party City offered very little help, forcing the team to book its own travel home. And the employee said – and emails viewed by CNN show – that the company offered little guidance for what to tell its Chinese vendors about a potentially sensitive issue.
“We got an email without any direction on how to get ourselves home. Or support,” the employee said.
In an email sent to company management, the employee on the China trip was asking for answers – but told CNN they received none. The company paid for their flights home, but the staff had to make all the changes themselves. They were told to pay for any other expenses out of pocket, and they were promised they would be reimbursed. The company ultimately paid back the employees for their out-of-pocket expenses.
“We asked for information on why we were being told to leave, and no one could tell us anything,” one employee said. “We had to work out the logistics on getting home on our own. No one stepped in to assist on flights, hotel, etc. The six of us did that on our own.”
The team sought guidance from Party City to smooth over relations with the vendors they were no longer meeting with.
“We understand that the Executive Leadership Team is not able to provide us with details. However, we need help with corporate messaging,” the team member emailed management while in China. “We cannot tell the vendor community that corporate has us to return home as they are sensitive to bankruptcy concerns.”
“We don’t have much information to navigate the situation,” the member said in the email.
Among the concerns: Wonder Group, a Party City joint venture that had gone bankrupt in June 2024, already had vendors on edge. The costume factories with which Party City did business lost money when Wonder Group went bankrupt.
“We are with someone who was with the joint venture and had personal life threats after the joint venture bankruptcy,” the employee on the China trip wrote to management in an email viewed by CNN. “He is pressing us for answers. The team in the Hong Kong office is concerned right now that we are canceling this trip.”
As they sat in the airport lounge Friday waiting for their flight home, another employee, who also requested anonymity, described a scene of tears and fear.
The team returned from their trip on Friday, December 6; by Monday, they were the first to be told by Party City to work from home for the rest of the year. They received no further communication or explanation, the employees said.
Party’s over
The remainder of office staff received the communication to work from home for the rest of 2024 on Tuesday, December 10. The company had told some teams – but not all – that they were urged to work from home out of concern for their safety.
A third employee who was not on the China trip described the situation in the office as “chaos” after they received the email. The front doors to the office were locked, and employees did not receive further details.
That’s when most staff figured out that something was wrong at Party City. One staffer told CNN that they felt something was wrong in the weeks leading up to the layoff announcement but had no idea about the severity of the situation.
“It’s just like the biggest slap in the face that they could’ve done,” said one of the Party City employees on the China trip. “And no company should treat their employees like this.”
On December 20, the party was over. The company announced it was filing for bankruptcy and liquidating, laying off hundreds of corporate staff effective immediately. Most of the company’s 12,000 staff work in stores – they’ll all be let go after the liquidation sales end in late February.
Employees received the news that day via a video meeting that employees have described as leaving them confused, frustrated and blindsided.
“It’s really important for you to know that we’ve done everything possible that we could to try to avoid this outcome,” CEO Barry Litwin said on the video call. “Unfortunately, it’s necessary to commence a winddown process immediately.”
Now Party City faces a class-action lawsuit filed in Texas on behalf of its New Jersey employees for violating the WARN Act, because employees were given no notice of termination and they were not paid after their termination date as the law requires, the staff argue. Party City has not responded to the lawsuit in court filings.
They are seeking compensation. But they are also left with feelings of betrayal and abandonment.
“The few meetings we had with them it was always like: ‘It’s going to be a long road ahead, but we’re going to get through,’” a former corporate employee who prefers to remain anonymous as there is a pending lawsuit told CNN, “It’s going to be a better company. It’s going to be transformed. We knew we weren’t in a great place but there was never an inkling like, ‘Hey, we might not make it at all.’”
