According to an article in the Dallas Mornings News, Simmons Co., the maker of Beautyrest mattresses plans to file for Chapter 11 bankruptcy protection in a move to place new owners in charge of the bedding unit and significantly lower the company's debt load.
The article said:
"The plan, which will not affect the company's operations, is expected to reduce its total debt from about $1 billion to $450 million."
The Chapter 11 bankruptcy plan which must be approved by the bankruptcy court includes debtor in possession loans from some of the company's existing creditors, $15 million in cash for note holders and full payment for vendors, suppliers, workers and senior bank lenders. The mattress maker hopes to secure the agreement of note holders and senior bank lenders within 30 days and then file Chapter 11 bankruptcy shortly thereafter.
Unfortunately, Simmons is not alone in considering bankruptcy protection. The entire mattress industry has been hit hard as financially strapped consumers hold off on making expensive purchases as the recession wears on. Even leading mattress seller Sealy Corp experienced sales drops of 20.5 percent in the three-month period ending in May, posting a net loss of $5.2 million, compared to $12 million in profit last year.