Serta Simmons completes restructuring and emerges from Chapter 11

By Sarah Lizee

Olympia, Wash., June 29 – Serta Simmons Bedding, LLC completed its financial restructuring and has emerged from Chapter 11 bankruptcy, according to a press release.

A new board of directors has been appointed to oversee the company. Previous board members Shelley Huff, chief executive officer of the company, and Brandi Thomas, group vice president and chief audit executive of General Electric, will continue to hold board positions.

Mark Genender, managing partner of Bristol Growth Capital, LLC, who previously sat on the Simmons board, will serve as chairman.

The rest of the board is made up of business leaders with experience in manufacturing, consumer durables and retail, including Charlie Eitel, former CEO of Simmons Bedding Co., Jim Fogarty, CEO of Fullbeauty Brands, Alan Shaw, former president and CEO of Electrolux North America, and an additional board member to be announced.

The company said it is emerging with ample liquidity and a more flexible capital structure that will enable it to execute its turnaround.

As a result of the Chapter 11 process, Serta reduced its funded debt to about $315 million from roughly $1.9 billion. The nearly $1.6 billion debt reduction lowers the company’s annual cash interest expense by more than $100 million, enabling more investments back into the business, Serta said.

Creditor treatment

Under the plan, other secured claims and priority non-tax claims will be paid in full.

Holders of class 3 first-lien first-out claims will receive a pro rata share of new term loans equal in amount to the total amount of claims in this class.

Holders of class 4 first-lien second-out claims will receive a pro rata share of (i) 100% of new common interests issued on the effective date, less any new common interests distributed to holders in class 5 and subject to dilution by the new common interests distributed under the management incentive plan (MIP), and (ii) the total amount of new term loans less amounts distributed on account of class 3.

Because class 5 holders of non-prepetition term loan claims voted to reject the plan, each holder will receive its pro rata share of 1% of new common interests issued on the effective date, subject to dilution by any new common interests distributed through the MIP.

Subject to compliance with some requirements, holders of class 6A ongoing general unsecured claims will receive payment in full no later than the date that is 60 days from the later of the effective date and the execution of the 6A trade agreement.

Holders of 6B other general unsecured claims will receive their pro rata share of the class 6B trust interests. The trust will receive for distribution $5.75 million and certain causes of action.

Holders of intercompany claims will receive nothing under the plan.

Exit financing details

The company’s exit financing consists of a $315 million term loan and a $100 million revolver.

The term loan is with Wilmington Savings Fund Society FSB as administrative agent and collateral agent. Wells Fargo Bank, NA is the administrative and collateral agent on the revolver.

The term loan bears interest at SOFR plus 750 basis points.

Interest on the revolver is SOFR plus 225 bps to 275 bps, depending on quarterly average excess availability.

The term loan matures in five years, and the revolver matures in four years.

Serta 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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