On October 3, 2008, Comfort Co, Inc., the Delaware holding company for Sleep Innovations, Inc., filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware.  Sleep Innovations designs, manufactures and distributes products including pillows, mattresses and mattress covers to retailers throughout North America.  As stated in the debtor’s first day motions,  Sleep Innovations employed 836 employees at the time it filed for bankruptcy and has affiliates in California, Mississippi, Indiana, Georgia, Illinois, Iowa, Massachusetts and Texas.

Weak consumer spending, compounded by volatile commodity prices, contributed to Sleep Innovations’ filing for bankruptcy.  The bedding industry is highly correlated to the housing market.  As the U.S. housing market deteriorated,  so too did consumer demand for mattresses.  Sleep Innovations also had to deal with the recent increase in the petrochemical prices.  As a manufacturer that relies on foam products,  the rise in petroleum products lowered Sleep Innovations’ profitability.

Sleep Innovations’ gross sales for 2007 totaled $432 million.  At the time it filed for bankruptcy, the Debtor’s first lien credit agreement totaled $290 million, and the second lien credit agreement totaled $50 million.  Sleep Innovations’ trade debt totaled $34 million.  Sleep Innovations largest unsecured creditors include:

  • Dow Chemical … $3.5 million
  • BASF … $2.9 million
  • Standard Fiber … $2.2 million
  • Huntsman Polyurethanes … $705,000
  • Supreme Quilting … $656,000
  • IBM … $599,000
  • Weyerhaeuser … $469,000
  • Momentive Performance Mat. … $449,000
  • Alix Partners … $426,000
  • Rothschild, Inc.  … $326,000

Sleep Innovations is represented by Duane Morris, LLP.  Lowenstein Sandler represents the Creditors’ Committee.