UPDATE: Court approves sale of 1800mattress.com to Sleepy's
Price set at $25 million
Larry Thomas -- Furniture Today, June 26, 2009
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 a court-supervised auction in late May, 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.
Franchisee Consolidated Group, which operates in all or parts of Massachusetts, Vermont, Rhode Island, New Jersey, Pennsylvania, Delaware and Florida, had strenuously objected to the Sleepy's proposal, arguing that it violated a fundamental purpose of bankruptcy law because it wouldn't allow 1800mattress.com to preserve its business.
Consolidated also argued that Dial-A-Mattress International, the 1800mattress.com unit that holds the franchise agreements, is a financially viable company.
Milton rejected those arguments, even though his ruling acknowledged "the rejection of the franchise agreements could have devastating effects on the franchisees and involve complicated litigation."
Consolidated was one of five unsuccessful bidders for the bankrupt retailer.
"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.
Founded in 1976 as Dial-A-Mattress by Napoleon Barragan, 1800mattress.com pioneered the sale of mattresses over the phone, and later, the Internet.
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yes correct but this merger will turn sleepy s into a
1 billion dollar company and they will get 15% of there sales from the web and chat they will be the largest
retail sleep shop that includes the best e comerece
in the market place a new way to buy a bed as runnong stores carry a high cost this is there way of growing on the cheap
catus7 - 2009-6-7 21:17:13 EDT -
How can Judge Milton ruled in Sleepy's favor knowing that Napoleon will get half a million each year for the next 10 yrs + Napoleon's 2 million loan will be forgiven, what a conflict of interest. As usual, money talks,why bother with the auction? All Sleepy's has to do is to top Consolidated's bid by roughly half a million and gets it. So it doesn't matter what price Consolidated came in since Newco is providing the financial for debtor. Don't bite the hand that feeds you.
susie mugyuk - 2009-6-7 02:20:10 EDT -
At the end of the day money talks and everything else walks. It is quite surprising that for such a little difference in the bid the judge has ruled in favor of a company with such a horrific track record with the NYC BBB and the NJ Attorney General's Office not to mention the random online comments posted on the internet. Sleepy's is a cancer that was allowed to spread even further. The juge may have followed the letter of the law but by doing so he has failed all the other entities (i.e., franchises, employees, vendors, consumers)that will be adversely affected in the short term and for years to come.
sleepy's client - 2009-26-6 12:14:53 EDT -
John, Joe, Jennifer they all ran this company in the ground as did Nap. The big mistake was Consolidated and Kline gets what he deserves for not letting them grow like Sleepy's.
Sharpe - 2009-26-6 11:10:04 EDT -
What this people forget is that Napoleon did not start this company by himself.. MRS.BARRAGAN is the one that helped him start his business and there is no mention of this in the media. Sleepys will continue to dismantle their competition little by little,but this company would have been great if it wasn't for Napoleon machismo to run the company down..Opening stores for 24 hours, selling expensive Chandeliers and not willing to understand the market of Bedding. You can walk to any Sleepys showroom and do you see any of those things there? no! When I started here this company had a future but then it spiral down hill with mismanagement.. Good luck to you all 800mattress employees.......
NY BC - 2009-26-6 10:37:02 EDT
Judge OKs Sleepy's bid
07/05/20091800mattress.com seeks quick ruling
06/25/2009Judge delays ruling in 1800mattress.com sale
05/28/2009
