Judge approves sale to Sleepy’s – Headline on mattress related blogs

On June 24, the U.S. Bankruptcy Court for the Eastern District of New York approved the sale of to Sleepy’s for $25 million.

Judge Dennis Milton issued a final order on the heels of a letter written by the attorneys for, who, according to news reports, pressed the court for the decision, which had been expected in early June. The letter cited the company’s “precarious” situation, and the fact that Sleepy’s affiliate Newco Trading was unwilling to extend debtor–in–possession financing beyond June 30 without confirmation that the sale to Sleepy’s would go through.

The bankrupt is a multichannel retailer with headquarters in Long Island City, N.Y., that sells mattresses online, through a call center and in brick–and–mortar stores. Mattress retailer Sleepy’s is a privately owned company headquartered in Bethpage, N.Y. It operates 700 stores in 11 states.

News reports indicate that the new owner intends to close the remaining brick–and–mortar stores, but keep the warehouse and headquarters building in Long Island City.

Sleepy’s outbid four other retailers and investor groups in a court–authorized auction of assets. Names of bidders were not disclosed.

Judge Milton’s 19–page ruling states that the bid from Sleepy’s was the “highest and best offer” received at the auction: “The bid was $320,000 greater than the second–highest bid and substantially greater than the original stalking horse bid of $2.1 million.”

Consolidated Group, a franchisee based in Windsor, Conn., had filed an $11.4 million damage claim against the franchisor and opposed the sale to Sleepy’s in court, stating that Sleepy’s intended to put Consolidated out of business.

The bankruptcy court’s ruling allows the new owner to dissolve’s franchise agreements: “The court’s independent review confirms that rejection of the franchise agreements benefits the estate.”

The ruling notes that the court had earlier approved Consolidated’s $11.4 million damage claim if its licensing agreements were ultimately rejected. The claim will then be added to the other claims from unsecured creditors. Sleepy’s bid will allow unsecured creditors to be paid 85% of what they were owed when filed for Chapter 11 protection in March, the ruling states.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>