• Party City's CEO told employees the specialty retailer is "winding down" operations, CNN reports.
• The company was impacted severely by the COVID-19 pandemic and never fully recovered.
• The company spent much of the past two years in bankruptcy proceedings and has closed 80 locations.

Party City's balloon is out of air.

CEO Barry Litwin, who took the job in August, told Party City's corporate employees on Friday that operations were "winding down" immediately, CNN reported.

The news follows reports last week that the company was contemplating a second bankruptcy in two years as debt continued to weigh on profitability.

A spokesperson for Party City did not immediately respond to a request for comment from Business Insider.

Litwin told employees the company had done what it could to avoid shutting down but that, "unfortunately, it's necessary to commence a wind-down process immediately," CNN reported.

Party City navigated a pre-pandemic shortage of helium for balloons, securing a new supply source.

It was impacted severely by the COVID-19 pandemic, when lockdowns and social distancing ended many celebratory gatherings, and other mass retailers like Amazon, Walmart, and Target stepped up their party supply offerings.

The company spent much of 2023 in bankruptcy proceedings and reportedly closed 80 locations, or roughly a tenth of its store fleet.

It exited bankruptcy in September 2023, after a judge canceled $1 billion of its debt. Litwin was appointed CEO a year later.