Mattress Discounters files for Chapter 11
By Larry Thomas -- Furniture Today, September 14, 2008
UPPER MARLBORO, Md. — Top 100 retailer Mattress Discounters filed for Chapter 11 bankruptcy protection last week and said it intends to close about 50 of its 140 stores.
The bedding specialty chain said it already has obtained debtor-in-possession financing and hopes to put the reorganization effort on a “fast-track” basis so it can emerge from Chapter 11 protection in the first quarter of next year.
“In the face of a very difficult and trying time for most retailers, we are pleased to be in a position to be able to work with our lender to restructure our business,” said Mattress Discounters President Steve Newton.
The company's principal secured lender, HBK Investments, has agreed to provide the DIP financing, Newton said.
“With the approval and cooperation of our lender, we are ready to implement a plan that will allow us to continue providing high-quality products and services, without interruption, in our home market.”
The retailer has about 90 stores in Delaware, Maryland, Virginia and the District of Columbia, and another 50 stores in Massachusetts, New Hampshire and Rhode Island.
Mattress Discounters has asked the U.S. Bankruptcy Court in Maryland for permission to close all 50 of the New England stores, saying those locations have recorded a year-to-date net loss of $2.9 million. In 2007, those stores lost $1.5 million, the company said.
Companywide, Mattress Discounters recorded a net loss of $8 million for the first half of 2008 and had a $3 million net loss in 2007, according to court filings.
According to court documents, the retailer's seven largest unsecured creditors are producers of mattresses and related products. They are collectively owed $7.42 million.
Simmons, which is owed $4.16 million, is the largest unsecured creditor, followed by Tempur-Pedic at $862,202.
In addition, Sealy is owed $753,240, Comfort Solutions by King Koil is owed $623,136, and components producer Leggett & Platt is owed $570,235.
Metal bed resource Fashion Bed Group, which is owned by Leggett, is owed $238,445, while Protect-A-Bed, a suppler of mattress pads, pillows and related products, is owed $215,888.
Mattress Discounters stores in California, Pennsylvania and the Virginia Beach, Va., area are operated by licensees and are not affected by the Chapter 11 filing.
The bankruptcy filing is Mattress Discounters' second trip through Chapter 11 this decade. The company sought Chapter 11 protection in October 2002 and emerged from bankruptcy about five months later.
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