Receives Preliminary Approval for $50 Million Debtor-In-Possession
          Financing and is Authorized to Continue 'Business As Usual'

    NAPERVILLE, Ill., March 26 /PRNewswire/ -- Factory Card Outlet Corp.
(Nasdaq: FCPY) announced yesterday that, to address certain near-term
operational and liquidity disruptions, it had, together with its wholly-owned
subsidiary, Factory Card Outlet of America Ltd., commenced on Tuesday,
March 23, 1999, voluntary cases under Chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the District of Delaware.  The Court
authorized the Company to continue to conduct business as usual while it
devotes renewed efforts to resolve its near-term operational and liquidity
problems and develops a reorganization plan.
    The Company also announced that it had obtained preliminary approval from
the Court for a new $50 million debtor-in-possession financing facility
provided by Foothill Capital Corporation and Paragon Capital LLC, two asset
based lending firms specializing in providing financing to the retail
industry.  The new facility provides an immediate source of funds to the
Company, enabling it to satisfy the customary obligations associated with the
daily operation of its business, including the timely payment of new inventory
shipments, employee wages and other obligations.  As a result of the filing,
and in accordance with the Nasdaq rules, Nasdaq has temporarily halted trading
in the Company's stock pending the receipt of information on the Company's
financial condition and reorganization plans.  The Company is cooperating with
Nasdaq and will be providing the requested information within the next few
days.
    All Factory Card Outlet stores across the nation are open and conducting
business as usual.
    "We believe we have the best franchise in the card, party supply and
special occasion industry and that our business is fundamentally sound," said
Stewart M. Kasen, Chairman, President and Chief Executive Officer of the
Company.  "With court protection under Chapter 11, Factory Card Outlet will
have the breathing room necessary to address the operational and liquidity
concerns that compelled this filing, and enable it to emerge as an even
stronger company.  While our efforts throughout the past several months to
resolve our liquidity constraints were not successful, I am convinced that the
rehabilitative process of Chapter 11 is the best way to resolve our remaining
issues quickly and protect our valuable franchise".
    Founded in 1985, Factory Card Outlet Corp., along with its wholly-owned
subsidiary, Factory Card Outlet of America Ltd., manage the largest chain
of company-operated superstores in the card, party supply and special occasion
industry in the United States, currently operating 210 stores throughout
23 states.  A majority of Factory Card Outlet stores are located in the
Midwest.  Factory Card Outlet has grown to be a dominant player and one of
the first superstore chains to emerge in the greeting card and party supply
industry.  In the past four years alone Factory Card Outlet opened 153 new
stores and, on a consolidated basis, has reported net sales for the fiscal
year ended January 30, 1999 of $226.5 million, up from $78.9 million in
fiscal 1995.
    Certain statements in this news release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995.  Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors many of which are described in the Company's
Transition Report on Form 10-K and other filings with the Securities and
Exchange Commission which may cause the actual results or achievements
expressed or implied thereby to be materially different from such
forward-looking statements.

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