Party City unit Anagram files Chapter 11 bankruptcy, plans for sale

By Sarah Lizee

Olympia, Wash., Nov. 8 – Anagram Holdings, LLC and two affiliates filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the Southern District of Texas to implement a sale of their assets, according to a press release.

Anagram is a subsidiary of Party City Holdco Inc., which recently received court approval for its plan of reorganization and emerged from Chapter 11 following its restructuring.

Anagram was not part of those proceedings and continues to support Party City as a retail partner.

An entity formed by about 60% of the company’s first-lien noteholders is acting as stalking horse bidder for the assets. The company plans to solicit competing bids from other interested parties.

The stalking horse bidder has committed to hire all Anagram employees and assume all pre- and post-petition trade payables.

Anagram has also received a commitment of $22 million in a debtor-in-possession note facility from 100% of the first-lien noteholders, with GLAS Trust Co. LLC as trustee and collateral agent.

The facility is set to mature in six months and bear interest at 13% per annum, payable in cash.

The company is seeking interim access to $10 million of the financing.

Anagram’s prepetition ABL lender has also consented to the continued use of the company’s $15 million ABL facility on a post-petition basis.

The ABL DIP facility is set to mature on April 30 and bear interest at daily simple SOFR plus 450 basis points, accruing daily and payable monthly in cash.

The company said that the financing, combined with cash on hand and positive cash flow being generated from the company's ongoing operations, will support the business and satisfy obligations during the court-supervised process.

The DIP note facility is conditioned on the stalking horse bid, which includes a credit bid for all of the first-lien notes and DIP notes, plus cash in an amount sufficient to repay the DIP ABL facility and fund a minimum amount of winddown expenses of the debtors’ estates plus assumption of material liabilities.

In April 2023, Anagram appointed Adrian Frankum, senior managing director at Ankura Consulting, as chief restructuring officer. Anagram's management team, including Frankum, will continue to lead the process and manage the business.

“Having carefully reviewed all available strategic options, we believe that a sale of the business will provide Anagram with the best path forward to accelerate global growth and strengthen our market leadership,” Frankum said in the release.

The company has filed customary motions seeking court approval to continue its operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption.

Anagram has also filed customary motions seeking court approval to continue its customer programs without interruption and expects to continue meeting commitments to customers in the ordinary course and to meet all post-petition obligations to vendors.

Anagram is represented by Simpson Thacher & Bartlett LLP as counsel, Ankura Consulting as financial adviser, and RW Baird as investment banker.

The lender group is represented by Milbank LLP as counsel and Houlihan Lokey as investment banker.

In its petition, the company listed 200 to 999 creditors, $100 million to $500 million in assets and $100 million to $500 million in liabilities.

Its largest unsecured creditor is TSG Server & Storage, Inc., based in St. Paul, with a $1.08 million trade payables claim. No other creditors were listed with unsecured claims of $1 million or more.

The foil balloon manufacturer is based in Eden Prairie, Minn. The Chapter 11 case number is 23-90901.

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