NEW YORK - Serta Simmons Bedding, which accounts for nearly one-fifth of United States bedding sales, has filed for bankruptcy protection in an effort to eliminate most of its debt, as the slowing economy and rising interest rates crimp consumer demand.
The company, whose roots date to 1870, on Monday night filed for Chapter 11 protection from creditors with the US Bankruptcy Court in the Southern District of Texas.
Its pre-packaged bankruptcy plan calls for debt to be reduced to US$300 million (S$395 million) from US$1.9 billion.
Serta Simmons has also lined up US$125 million in financing to keep operating, including to pay its 3,600 employees.
It hopes to win court approval for its restructuring as soon as May 8.
The company’s brands include Serta, Simmons, Beautyrest and Tuft & Needle. Sales totalled US$2.4 billion in the year ending June 30, 2022.
In a court filing, chief financial officer John Linker said a 2020 restructuring that added US$200 million of new capital at first enabled Serta Simmons to weather higher raw material costs and supply chain disruptions caused by the Covid-19 pandemic.
But he said significant amounts of debt maturing in 2023 make the company’s capital structure unsustainable, necessitating a comprehensive restructuring that is now supported by more than three-quarters of its key lenders.
Some lenders, including funds managed by Angelo Gordon & Co, Apollo Global Management and Gamut Capital Management, have sued to modify or undo the 2020 restructuring.
Serta Simmons wants all of that litigation put on hold during the bankruptcy, and on Tuesday filed its own lawsuit in the Texas bankruptcy court to resolve the lenders’ claims and validate the 2020 restructuring. REUTERS