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Unsecured 1800 creditors to get 48% of debt

By Larry Thomas -- Furniture Today, January 4, 2010

NEW YORK — A U.S. Bankruptcy Court judge here has approved a liquidation plan for bankrupt retailer 1800mattress.com that would pay unsecured creditors at least 48% of the money they are owed.

Under the plan approved by Judge Dennis Milton, the retailer's case would remain as a Chapter 11 bankruptcy proceeding, even though the retailer is being liquidated. Attorneys for 1800mattress.com argued successfully that administrative claims and expenses would be higher if the case were converted to a Chapter 7 proceeding.

According to documents filed with the court, the retailer expects to have at least $9.77 million available to distribute to unsecured creditors. That would represent about 48% of the estimated $20.4 million in claims expected.

Under a “best-case” scenario, documents show the retailer would have $10.5 million to distribute to unsecured creditors. If the total amount of claims is less than $20.4 million, then each creditor would have a greater percentage of his claim satisfied.

In addition to the money paid to unsecured creditors, Consolidated Mattress, a 1800mattress.com franchisee, is being paid $10 million for the loss of its franchise, according to court records.

1800mattress.com, which pioneered mattress sales over the telephone, filed for bankruptcy protection in March and was sold in August to rival sleep shop chain Sleepy's for $25 million.

Documents filed with the court list 1800mattress.com's assets at $14.16 million — including $13.49 million in cash. Remaining inventory is worth no more than $115,000, and accounts receivable are listed as being worth $621,000 to $690,000.

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Bankruptcy judge approves 1800mattress.com liquidation plan

Dec 23, 2009

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