Mattress Firm Files for Bankruptcy, Closes Three Indiana Stores

Mattress Firm Files for Bankruptcy, Closes Three Indiana Stores

Bankruptcy is not a process reserved solely for cash-strapped individuals. Even large companies deal with massive amounts of debt, and as a result, some are forced to wipe out debt through bankruptcy.

Mattress Firm will not be sleeping well for a while as the company files for bankruptcy and looks for ways to restructure itself as it deals with mounting debt. Known as the largest mattress retailer in the United States, Mattress Firm filed for Chapter 11 bankruptcy on October 5. The store plans to close 700 locations, including three in Indiana. It will close one store in Indianapolis, one in Schererville, and another in Highland.

In its bankruptcy petition, the company listed more than $1 billion in assets as well as more than $1 billion in debt. Mattress Firm owes Serta Simmons Bedding more than $90 million. Mattress Firm is owned by Steinhoff International Holdings NV, which has been plagued by accounting issues.

Plans to Restructure

Unlike some companies, Mattress Firm does not plan on going out of business for good. The company has 3,272 locations in 49 states across the country. It does plan to close 700 stores in markets where there are too many in close proximity. This process will be started quickly, with a group of 200 stores to be shut down in just days.

While the bankruptcy is in the process, Mattress Firm hopes to continue operating as usual. The company is in the process of creating a restructuring plan. The first step is to ask the court to approve $250 million in funding solely for operating expenses. This will allow the company to pay bills as it reorganizes. Another $525 million in credit has been put into the company to help fund its turnaround. The bankruptcy process may take up to 60 days.

What is Chapter 11 Bankruptcy?

Many companies file for Chapter 11 bankruptcy in an effort to reorganize their business. A Chapter 11 bankruptcy allows a company to present a plan of restructuring to the court. This plan must address how the company plans to keep its business alive as well as pay back creditors.

Instead of selling assets to pay back the owed amount, the company negotiates with creditors to alter the terms of the loans. This is how Chapter 11 bankruptcy differs from Chapter 7 bankruptcy.

Chapter 11 bankruptcy is also the most complex type of bankruptcy. It is also very costly, which is why it should be done with caution. It is not right for all companies, which is why it is important to consult with a bankruptcy lawyers on the best course of action when there is a significant amount of debt involved.

Discuss Your Options with a Merrillville Bankruptcy Lawyer

Bankruptcy can happen to large companies. While some plan to go out of business altogether, others hope to stay afloat through restructuring options. If you or your company is considering bankruptcy, contact the Merrillville bankruptcy attorneys at Whitten & Whitten They can determine if bankruptcy is the right choice for your situation. Call (219) 756-0555 to schedule a consultation.