Houston, Texas, USA : Mattress Firm Inc, the largest U.S. mattress retailer, and its subsidiaries today filed voluntary Chapter 11 restructuring cases in U.S. Bankruptcy Court in Delaware to implement a prepackaged plan of reorganization.
The company said the plan provides Mattress Firm with access to new financing to support the business, establishes an efficient and orderly process for closing certain economically inefficient store locations, and provides for all trade creditors to continue being paid in full for goods and services provided.
The company said the action will strengthen its balance sheet and optimize its store footprint.
Mattress Firm said customers will continue to find the mattress and bedding accessories they need in stores and on their website as normal.
The company said it will take steps to ensure that deliveries will be made as scheduled and without interruption.
It announced that it had secured commitments for $250 million in debtor-in-possession financing to support operations.
It said it expects to complete the restructuring within the next 45 to 60 days with commitments for $525 million of senior secured credit facilities enabling it to emerge from Chapter 11 and support operations thereafter.
“The process we have initiated today will allow us to strengthen our balance sheet and accelerate the optimization of our store portfolio,” said Steve Stagner, the company’s executive chairman and CEO. “Leading up to the holiday shopping season, we will exit up to 700 stores in certain markets where we have too many locations in close proximity to each other.
“We intend to use the additional liquidity from these actions to improve our product offering, provide greater value to our customers, open new stores in new markets, and strategically expand in existing markets where we see the greatest opportunities to serve our customers.”
Steinhoff acquired Mattress Firm for $3.8 billion in 2016. Mattress Firm had acquired HMK Mattress Holdings LLC, the parent company of competitor Sleepy’s, the same year for $780 million and then rebranded the shops.
More than 20 retailers have filed bankruptcy since the beginning of 2017. Toys “R” Us Inc did not survive and liquidated, while others including children’s retailer Gymboree Corp and Payless ShoeSource Inc reorganized.
Mattress Firm lost Tempur Sealy International Inc (TPX.N), the maker of mattress brand Tempur-Pedic, as a supplier last year, limiting its offerings.
Steinhoff is a retail conglomerate that sells furniture, household goods and general merchandise in Europe, Africa and Australia, and it has automotive dealerships in South Africa. In July, creditors agreed to hold debt claims for three years, removing a threat of default.
Steinhoff, which has more than 40 brands that include Conforama, Mattress Firm and Poundland, has sold assets including its Polish unit Kika/Leiner and stakes in investment holding firm PSG and industrial firm KAP.