Court-Supervised Sale Aims to Create North American Sleep Industry Leader
Minneapolis-based mattress and sleep technology company Sleep Number has filed for Chapter 11 bankruptcy protection and entered into an agreement with Sleep Country Canada that could combine the two businesses into one of North America’s leading mattress and bedding companies.
The company announced that it has initiated a voluntary Chapter 11 sale process in the U.S. Bankruptcy Court for the Southern District of New York. Under the proposed transaction, Sleep Country Canada will act as the stalking horse bidder, setting the initial offer in a court-supervised sale process.
The agreement remains subject to court approval, higher competing bids, and customary closing conditions. Despite the restructuring, Sleep Number emphasized that it expects to continue normal operations throughout the process.
Founded four decades ago, Sleep Number has built a strong reputation for its personalized sleep solutions and smart bed technology. However, despite recent operational improvements and turnaround initiatives, the company acknowledged that its financial structure has become unsustainable.
Linda Findley, President and CEO of Sleep Number, said the company has made significant progress in strengthening operations but needed a solution to address its financial challenges.
The company reported assets between $500 million and $1 billion, while liabilities are estimated between $1 billion and $10 billion. To support ongoing operations during the restructuring, Sleep Number expects to secure up to $260 million in debtor-in-possession financing, including approximately $65 million in new funding.
According to the company, this financing, combined with operating cash flow, is expected to provide sufficient liquidity while the sale process proceeds.
Sleep Number reassured customers and business partners that retail stores will remain open, online sales will continue, and its connected smart bed ecosystem, including mobile applications and digital services, will remain fully operational throughout the restructuring.
The bankruptcy filing comes as the company continues executing a broad turnaround strategy. Recent initiatives included the launch of its largest product redesign in nearly ten years, a new integrated marketing campaign, and measures aimed at improving profitability and reducing costs.
For Sleep Country Canada, the proposed acquisition represents a significant opportunity to strengthen its product portfolio through Sleep Number’s proprietary smart bed technology while expanding its footprint in the United States.
Stewart Schaefer, President and CEO of Sleep Country Canada, noted that the combination would leverage the strengths of both organizations and create opportunities for future growth in the U.S., Canada, and other international markets.
As part of the restructuring process, Sleep Number has also requested court approval to reject leases associated with 44 previously closed and non-operational retail locations. The company stated that it intends to retain as many profitable locations as possible while optimizing its store network.
The proposed transaction highlights ongoing consolidation within the mattress and bedding sector, as companies seek greater scale, operational efficiencies, and technological differentiation in an increasingly competitive market.
If approved, the deal would bring together Sleep Number’s advanced sleep technology platform and Sleep Country Canada’s extensive retail expertise, creating a stronger player in the evolving North American sleep solutions market.
