Serta Simmons Bedding (SSB) has filed for Chapter 11 bankruptcy at the U.S. Bankruptcy Court for the Southern District of Texas. The filing is part of a “Restructuring Support Agreement with key financial stakeholders” aimed at reducing debt and enabling future investments, according to a company press release.
The restructuring effort has the support of 81% of the retailer’s first lien, first out priority term loan lenders, 77% of its first lien, second out priority term loan lenders and a majority of equity holders, according to SSB.
SSB will maintain its usual operations during the proceedings and will continue filling orders for its partners. The company also will maintain its plans to make “meaningful launches” for the Serta and Beautyrest brands this year.
“SSB has a deep heritage in providing industry-leading sleep solutions,” said Shelley Huff, CEO of SSB in a statement. “With the support of key financial stakeholders, we are taking steps to strengthen our financial position. After the conclusion of this process, we will have a stronger financial foundation to drive profitable growth and continue delivering the high-quality, innovative products that our company is known for. Looking ahead, we will remain focused on launching new innovations, further building a high-performing and resilient supply chain and expanding the commercial side of our business to meet demand for our trusted brands and products.”
The agreement aims to reduce SSB’s debt from approximately $1.9 billion to $300 million. The retailer already has received a commitment for a $125 million asset-based loan following its emergence from bankruptcy, as well as an additional $125 million in debtor-in-possession financing. These funds, in addition to SSB’s $170 million cash on hand, will be used to support the business during the Chapter 11 process and beyond.
Early 2023 has proven to be a volatile time for mattress retailers. Earlier in January, Mattress Firm withdrew its plans for an IPO this year; some analysts believe the retailer may seek an acquisition instead. Tempur-Sealy International is seen as a prime buyer candidate, according to Wedbush Securities.
Update: Serta Simmons will close its Windsor Locks, Conn. manufacturing facility in early August, according to a WARN notice filed with the Connecticut Department of Labor. The retailer also reportedly plans to close Serta Simmons also plans to close facilities in Waycross, Ga., and Kirkland, Quebec, according to Yahoo! News.