ATLANTA, Georgia: In light of its significant debt, the slowing economy and rising interest rates stifling consumer demand, US mattress-maker Serta Simmons Bedding has filed for bankruptcy protection.
The Atlanta, Georgia-based company, which accounts for some 20 percent of US bedding sales, filed for Chapter 11 protection from creditors this week in the US Bankruptcy Court in the Southern District of Texas.
The company has asked for its debt to be reduced to $300 million from $1.9 billion, under its prepackaged bankruptcy plan.
It has also allocated $125 million in financing to keep operating, including for the salaries of its 3,600 employees, and hopes to win court approval for its restructuring by 8th May.
Serta Simmons's brands include Serta, Simmons, Beautyrest and Tuft and Needle, whose sales total $2.4 billion in the year ending 30th June, 2022.
In a court filing, the company's Chief Financial Officer, John Linker, said a 2020 restructuring added $200 million of new capital, which then enabled Serta Simmons to cope with higher raw material costs and supply chain disruptions caused by the COVID-19 pandemic.
However, debt that matured in 2023 made the company's capital structure unsustainable, leading to a comprehensive restructuring that is currently supported by more than three-quarters of its key lenders, he added.
Some lenders, including Angelo Gordon and Co, Apollo Global Management and Gamut Capital Management, have sued the company to modify or undo the 2020 restructuring.