Serta Simmons proposes May 8 hearing for Chapter 11 plan confirmation

By Sarah Lizee

Olympia, Wash., Feb. 2 – Serta Simmons Bedding, LLC is seeking approval of a new Chapter 11 plan schedule, according to a motion filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

Under the revised schedule, the deadline to object to the company’s disclosure statement would be March 17, and the disclosure statement hearing would take place on March 23.

The plan confirmation objection deadline would be May 1, and the confirmation hearing would occur on May 8.

As previously reported, the company’s plan is centered on a restructuring support agreement that aims to cut the company’s debt to about $300 million from $1.9 billion.

The restructuring support agreement has been agreed to by about 81% of the company’s first-lien, first-out priority term loan lenders and about 77% of its first-lien, second-out priority term loan lenders, as well as a majority of its existing equity holders.

Under the plan, each holder of an FLFO claim under the prepetition term loan facility has agreed to exchange its claims for its pro rata share of $195 million of a new $300 million term loan facility.

Each holder of an FLSO claim under the prepetition term loan facility has agreed to exchange its claims for its pro rata share of 100% of the equity in the reorganized debtors (less any equity distributed to holders of class 5 non-PTL claims and subject to dilution by equity distributed under a management incentive plan), and $105 million in principal amount of takeback debt in the form of new term loans.

Each holder of non-PTL term loan claims will receive its pro rata share of 4% of new common interests issued on the effective date, subject to dilution from the management incentive plan, if this class votes to accept the plan. If the class votes to reject the plan, holders will receive their pro rata share of 1% of the new common interests, subject to dilution.

Holders of ongoing general unsecured claims will receive, in exchange for executing a trade agreement providing for the continuation of goods or services on the same or better terms as existed prior to the petition date, no more than four cash installments, which payments will result in full payment of the allowed amount of the claims on no better terms than payment in the ordinary course of business.

Holders of other general unsecured claims will receive, in full satisfaction of their claims, their pro rata share of a recovery pool.

Other secured claims and priority non-tax claims are unimpaired.

Intercompany claims will be adjusted, reinstated or discharged,

Intercompany interests will be unaffected and continue in place after the effective date, only for the administrative convenience of maintaining the existing corporate structure of the debtors.

A settlement will be approved among the debtors, the consenting creditors, and the consenting equity holders resulting in the contribution of non-debtor entity Dawn Holdings, Inc. into the restructuring.

Serta, an Advent International portfolio company, is an Atlanta-based manufacturer and distributor of mattresses. It filed bankruptcy on Jan. 23 under Chapter 11 case number 23-90020.

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