It has long been speculated that Mattress Firm, the US mattress retailing giant, was in a solvency crisis, largely as a result of an aggressive expansion strategy in recent years coupled with the spectacular collapse of its parent, Steinhoff International Holdings NV following an accounting scandal in late 2017 and has been struggling to restructure the debt of some subsidiaries with its creditors.
Well now it's all over.
With liabilities of at least $1 billion and over 50,000 creditors (including Simmons Manufacturing Co. and Serta Mattress Co.), Mattress Firm - US' largest mattress retailer - has filed for Chapter 11 bankruptcy in Delaware (along with a dozen other affiliates - including units of well-known brand names such as Sleepy’s and 1800mattress.com).
As Bloomberg reports, the company plans to complete a restructuring within 45 to 60 days, closing poorer performing stores, and has a commitment of $525 million in senior secured credit to fund its turnaround, according to a Friday statement.
According to Mattress Firm’s web site, it has more than 3,000 stores across 49 states, and will keep operating as usual as it moves through a restructuring.
"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," Steve Stagner, CEO of Mattress Firm, said in the statement.
The company said the bankruptcy includes a prepackaged restructuring plan, meaning it already has the approval of key stakeholders, but will still need court approval.
Mattress Firm needs “incremental liquidity” for its recovery to be secured, Steinhoff said in the presentation to creditors, saying last month it was evaluating ways to attract extra funding, and bondholders were said to be considering a loan of about $300 million into the firm as part of a bankruptcy filing.
Bought for $3.8 billion two years ago, Mattress Firm has emerged as a headache for Steinhoff as it strives to shore up liquidity following an accounting scandal. The 3,300-store chain expanded too aggressively, suffered from ineffective marketing and has been embroiled in a dispute with suppliers, Steinhoff said.