American mattress maker Serta Simmons is filing for bankruptcy protection

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By Jonathan Stamp

(Reuters) – Serta Simmons Bedding LLC, which accounts for nearly one-fifth of US bedding sales, has filed for bankruptcy protection in a bid to shed most of its debt as the slowing economy and rising interest rates push demand from the decrease consumer.

The Doraville, Georgia-based company, whose roots date back to 1870, filed Monday night for Chapter 11 protection from creditors in U.S. Bankruptcy Court in the Southern District of Texas.

The prepackaged bankruptcy plan requires debt to be reduced from $1.9 billion to $300 million.

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Serta Simmons also arranged $125 million in financing to continue, including to pay its 3,600 employees.

It hopes to receive court approval for its restructuring on May 8.

The company’s brands include Serta, Simmons, Beautyrest, and Tuft & Needle. Revenue was $2.4 billion in the year ended June 30, 2022.

In a lawsuit, Chief Financial Officer John Linker said a 2020 restructuring that initially added $200 million in new capital enabled Serta Simmons to weather higher raw material costs and supply chain disruptions caused by the COVID-19 pandemic .

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But he said significant amounts of debt maturing in 2023 make the company’s capital structure unsustainable, necessitating extensive restructuring now backed by more than three-quarters of major lenders.

Some lenders, including funds managed by Angelo Gordon & Co and Apollo Global Management, have filed suit to amend or reverse the 2020 restructuring.

Serta Simmons wants all those lawsuits suspended during the bankruptcy and filed its own lawsuit Tuesday in Texas bankruptcy court to resolve the lenders’ claims and validate the 2020 restructuring.

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Angelo Gordon declined to comment. Apollo did not immediately respond to requests for comment on Tuesday.

Serta Simmons’ advisors include law firm Weil, Gotshal & Manges, Evercore Group LLC, and FTI Consulting Inc.

The case is In re Serta Simmons Bedding LLC et al, U.S. Bankruptcy Court, Southern District of Texas, No. 23-bk-90020.

(Reporting by Jonathan Stempel in New York. Editing by Sharon Singleton and Jonathan Oatis)

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