By Jonathan Stempel
(Reuters) – Serta Simmons Bedding LLC, which accounts for practically one-fifth of U.S. bedding gross sales, has filed for chapter safety in an effort to eradicate most of its debt, because the slowing financial system and rising rates of interest crimp client demand.
The Doraville, Georgia-based firm, whose roots date to 1870, filed for Chapter 11 safety from collectors on Monday night time with the U.S. Chapter Courtroom within the Southern District of Texas.
Its prepackaged chapter plan requires debt to be diminished to $300 million from $1.9 billion.
Serta Simmons additionally lined up $125 million in financing to maintain working, together with to pay its 3,600 workers.
It hopes to win courtroom approval for its restructuring as quickly as Might 8.
The corporate’s manufacturers embrace Serta, Simmons, Beautyrest and Tuft & Needle. Gross sales totaled $2.4 billion within the 12 months ending June 30, 2022.
In a courtroom submitting, Chief Monetary Officer John Linker mentioned a 2020 restructuring that added $200 million of latest capital at first enabled Serta Simmons to climate greater uncooked materials prices and provide chain disruptions attributable to the COVID-19 pandemic.
However he mentioned vital quantities of debt maturing in 2023 make the corporate’s capital construction unsustainable, necessitating a complete restructuring that’s now supported by greater than three-quarters of its key lenders.
Some lenders, together with funds managed by Angelo Gordon & Co and Apollo International Administration, have sued to switch or undo the 2020 restructuring.
Serta Simmons desires all of that litigation placed on maintain throughout the chapter, and on Tuesday filed its personal lawsuit within the Texas chapter courtroom to resolve the lenders’ claims and validate the 2020 restructuring.
Angelo Gordon declined to remark. Apollo didn’t instantly reply to requests for touch upon Tuesday.
Serta Simmons’ advisers embrace the legislation agency Weil, Gotshal & Manges, Evercore Group LLC and FTI Consulting Inc.
The case is In re Serta Simmons Bedding LLC et al, U.S. Chapter Courtroom, Southern District of Texas, No. 23-bk-90020.
(Reporting by Jonathan Stempel in New York. Modifying by Sharon Singleton and Jonathan Oatis)