LONG ISLAND CITY, N.Y.–Sleepy’s has agreed to acquire certain assets of 1800mattress.com through Chapter 11 of the U.S. Bankruptcy Code.
1800mattress.com filed an involuntary petition in U.S. bankruptcy court in Central Islip, N.Y., under Chapter 7 yesterday—several days after Sealy and Blue Bell Mattress, a licensee of Comfort Solutions, filed a petition in this court to force 1800mattress into liquidation. Later, the court issued an order converting the case to Chapter 11.
According to a joint statement from Sleepy’s and 1800mattress, the former will provide debtor-in-possession financing so that 1800mattress can fulfill its operational obligations, including payments to suppliers and other business partners. The financing and the acquisition are both subject to the bankruptcy court’s approval. The statement added that 1800mattress’ franchisees in New England, Connecticut, Philadelphia, central and southern New Jersey, and Florida are separate companies that are not included in the filing.
The statement added that 1800mattress terminated discussions with “other interested parties” last week. The multichannel mattress retailer had announced that it had signed a letter of intent with an investor group headed by Ken Mazda, vice president of business development. In an interview this morning with HFN, a 1800mattress spokesman said this deal “did not move forward.”
Court documents said Sealy topped the list of 1800mattress’ largest unsecured creditors, with a trade debt of $1.2 million. Serta is second on the list at approximately $913,000. Simmons and Tempur-Pedic are also in the top 10, with the former at more than $475,000 and the latter at more than $315,000.
In the joint statement, Adam Blank, chief operating officer of Sleepy’s, called 1800mattress “a valuable brand poised for growth.” Napoleon Barragan, 1800mattress’ founder, chairman and chief executive officer, cited the “tremendous synergies” between the company and Sleepy’s. Barragan also said 1800mattress’ call center, Internet, chat functions and retail locations will remain open, and “it is business as usual for our company.”