New Jersey-headquartered party supplies retailer Party City (NYSE:PRTY) has been in the headlines lately but not for reasons that investors would want to celebrate. It looks like PRTY stock is getting delisted and Party City is engaged in bankruptcy proceedings.

Inflation and recession fears have taken a toll on the U.S. economy, and some businesses just couldn’t withstand the pressure. Party City has been particularly vulnerable, as consumers aren’t as likely to host parties when they’re prioritizing necessities like food and rent.

Some big banks actually invested in Party City, but the company still had major problems. So, let’s delve into the shocking details with three things investors need to know about Party City and PRTY stock.

Party City Has Filed for Bankruptcy

There’s no need to speculate or guess anymore. It’s official: Party City has, indeed, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas.

This doesn’t mean that Party City will immediately cease to exist or that it’s necessarily going out of business. In fact, the company “continues to welcome shoppers at the more than 800 Party City stores and online.”

Also, Party City said it’s filing legal motions “seeking to maintain business-as-usual operations.” This, however, isn’t a guarantee that Party City will actually continue long term as a going concern.

Party City Is Undergoing a Restructuring

There might actually be some positive news to report. Apparently, Party City is undergoing a restructuring. The company expects this to be completed during the second quarter of 2023.

The restructuring will be supported by a “group of holders of more than 70%” of Party City’s “senior secured first lien notes.” If all goes according to plan, the restructuring will “substantially reduce” Party City’s “debt and optimize its capital structure and liquidity.”

Will this result in Party City having a “strengthened financial position”? That’s what the company envisions, but again, no guarantees can be made here.

PRTY Stock Is Being Delisted from the New York Stock Exchange

So, here’s the real kicker for eager meme-stock traders. They might have enjoyed targeting Party City for short squeezes, but it looks like the party is coming to an end.

According to a press release, the New York Stock Exchange announced it has suspended trading of PRTY stock. Furthermore, the exchange “has determined to commence proceedings to delist the common stock of Party City.”

Sure, Party City might show up on another exchange. Getting booted from the NYSE isn’t a favorable outcome for Party City, though. Thus, while the “restructuring” might have a happy ending, the current situation doesn’t bode well for Party City and its stakeholders.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.