A massive retailer now files for unexpected bankruptcy amid uncertainty around its supply agreement with its corporate owner, the retailer Party City.
Balloon manufacturer Anagram filed for bankruptcy on Wednesday.
The retailer is by far the supplier’s largest customer.
Party City accounts for 38% of Anagram’s sales, the latter’s Chief Restructuring Officer Adrian Frankum, who was appointed in April, said in court papers.
The balloon maker also sells to distributors, value retailers such as dollar stores, and mass merchants including Walmart.
Along with supplying Party City generally with balloon products, the retailer and Anagram share intellectual property licenses.
In 2022, Anagram sales based on Party City-owned IP licenses amounted to $25 million for the balloon maker.
Party City filed for Chapter 11 earlier this year, though it didn’t include the Anagram subsidiaries.
While its restructuring plan has been approved by a federal bankruptcy judge, its case is still open, reports RetailDive.
“In May, Party City moved to nix the supply contract through the Chapter 11 process.
Although the motion is still pending in Party City’s case, Frankum said that the move to reject “has put additional pressure on [Anagram’s] operations” and its own restructuring negotiations.”
Under the original contract, Party City would have to pay $40 million in termination fees if it backed out of the supply agreement, which dates back to 2020.
But those fees owed to Anagram would likely receive minimal repayment in the bankruptcy process, according to Frankum.
In Anagram’s press release announcing its bankruptcy, the company said it “continues to support [Party City] as a valued retail partner.”
The company has a 110,000-square-foot manufacturing and printing facility at its headquarters in Eden Prairie, Minnesota, and a 391,000-square-foot distribution facility in Bloomington, Minnesota.
It has about 350 employees at its facilities.
Other Economy News Today
A massive retailer now closes several locations in Washington after filing for Chapter 11 bankruptcy last month.
Rite Aid, which operates 2,330 stores across 17 states, requested on November 2nd to increase the number of stores to close to 179.
“Rite Aid has served customers and communities across our country for more than 60 years, and the important actions we are taking today will enable us to move ahead as a stronger company.
With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives, and accelerating the execution of our turnaround strategy.
In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on – now and into the future,” said Jeffrey Stein, Chief Executive Officer and Chief Restructuring Officer.
Rite was initially closing only 11 Rite Aid stores in Washington, now a total of 17 are closing.
- Seattle: 9600 15th Avenue SW
- Lynnwood: 2518 196th Street SW (Bartell Drugs location. Closing November 14)
- Bellevue: 3620 Factoria Boulevard SE
- Bellevue: 11919 NE 8th Street
- Redmond: 7370 170th Avenue NE
- Graham: 22201 Meridian Avenue E
- Renton: 601 South Grady Way, Suite P
- Mill Creek: 3202 132nd Street Southeast (closed on November 12)
- Burien: 110 SW 148th Street
- Everett: 10103 Evergreen Way (closed on November 6)
- Lacey: 8230 Martin Way East
- Seattle: 1101 Madison St
- Seattle: 6401 12th Ave NE
- Kirkland: 312 Central Way
- Issaquah: 5700 E Lake Sammamish Pkwy SE
- Seattle: 3018 NE 125th St
“In addition, another location not listed on the filings will be closing. The Rite Aid store in Lake Stevens at 303 91st Ave NE will close on November 19, indicating that more stores may be added to the ever-growing list,” reports Ash Jurberg.
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