Court approves sale of 1800mattress.com to Sleepy's
Price set at $25 million
Larry Thomas -- Furniture Today, June 25, 2009
For an updated version of this story, click here.
NEW YORK — A U.S. Bankruptcy Court judge has approved the sale of bankrupt retailer 1800mattress.com to one-time rival Sleepy's for $25 million.
In ruling that the bid from Sleepy's was the "highest and best offer" received at last month's court-supervised auction, Judge Dennis Milton also allowed Sleepy's to reject 1800mattress.com's two franchise agreements.
"The Court's independent review confirms that rejection of the franchise agreements benefits the estate and that the decision to conduct an auction sale is a proper business judgment," Milton said in his 19-page ruling.
The ruling noted that the Court had earlier approved an $11.4 million damage claim for the franchisees if their agreements were ultimately rejected. It will be added to the other claims from unsecured creditors.
Milton said the Sleepy's bid would allow unsecured creditors to be paid 85% of what they were owed when 1800mattress.com filed for Chapter 11 protection in March.
"There was a spirited auction with seven rounds of bidding that ended with the (Sleepy's) bid in the amount of $25 million," Milton wrote. "The bid was $320,000 greater than the second highest bid, and substantially greater than the original stalking horse bid of $2.1 million."
Sleepy's, which was ranked No. 11 on Furniture/Today's most recent list of the Top 100 U.S. furniture stores, has indicated it will close the remaining bricks-and-mortar stores operated by 1800mattress.com, but keep its warehouse and headquarters building in Long Island City.
Sleepy's operates nearly 700 bedding specialty stores in 11 states and had estimated revenues of $831 million in 2008.
