Lead Plaintiff Deadline 10/02/2023
Party City Holdco Inc.
The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the District of New Jersey on behalf of those who acquired Party City Holdco Inc. (“Party City” or the “Company”) (OTC: PRTY) securities during the period from November 8, 2022 through June 9, 2023 (the “Class Period”). Investors have until October 2, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Party City sells party goods, costumes, decorations, and related items through retail and wholesale channels.
On January 6, 2023, the Wall Street Journal published a short article stating for the first time that Party City was contemplating filing bankruptcy. The article stated in relevant part: “Party City Holdco Inc. is preparing to file for bankruptcy within weeks, according to people familiar with the matter, after the party-favor retailer’s cash dwindled and inflation dampened sales.” On this news, the price of Party City shares declined by $0.18 per share, or approximately 50.00%, from $0.36 per share to close at $0.18 on January 6, 2023.
On January 18, 2023, the Company filed for bankruptcy. The information in the bankruptcy filings partially corrected the misrepresentations and omissions regarding the Company’s liquidity problems and shortfalls in borrowing capacity. On this news, the price of Party City shares declined by $0.25 per share, or approximately 67.57%, from $0.37 per share to close at $0.12 on January 19, 2023.
On June 9, 2023, the Company filed its Form 8-K revealing the going concern omission, the existence of a material weakness in internal control, and E&Y’s resignation. The information in the Form 8-K partially corrected the misrepresentations and omissions regarding both the going concern issue and the status of the Company’s internal controls. On this news, the price of Party City shares declined by $0.001 per share, or approximately 2.17%, from $0.046 per share to close at $0.045 on June 12, 2023.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose that: (i) affirmatively misrepresented that its capital resources “will be adequate to meet  liquidity needs for at least the next 12 months[;]” (ii) omitted that there was substantial doubt about the Company’s ability to continue as a going concern; (iii) downplayed the nature and extent of the Company’s then-existing liquidity problems; (iv) omitted that the Company’s existing credit facilities were insufficient to satisfy its operational needs and that it was unable to obtain additional loans in the normal course of business; and (v) omitted that there was a material weakness in its internal control over financial reporting.