38-year-old mattress chain faces Chapter 7 bankruptcy threat

Industry Overview - The furniture retail sector is experiencing an economic downturn, leading to major home furnishing companies closing stores and filing for Chapter 11 bankruptcy protection to reorganize their businesses [1] - Declining sales in the furniture industry are attributed to a multi-year housing slump and rising product and labor costs due to inflation and higher tariffs [1] Mattress Subsector - The mattress subsector of the furniture industry is also facing economic challenges, with retailers filing for bankruptcy to restructure severe debt obligations [2] - American Mattress is currently battling its unsecured creditors, who are seeking to convert its Chapter 11 case to Chapter 7 liquidation [2] Bankruptcy Proceedings - The Official Committee of Unsecured Creditors has alleged that American Mattress has not made meaningful progress toward reorganization and lacks a credible business plan or financial oversight [3] - The U.S. Trustee has filed a motion to convert the bankruptcy case to Chapter 7 or dismiss it, citing unpaid rent, professional fees, and recorded operating losses of $1.26 million since November [4] Company Response - American Mattress has countered the Chapter 7 conversion filings by claiming that a buyer has offered to purchase its assets and cover all cure costs [5] - The company argues that if the case is converted or dismissed, only the secured lender would likely be paid, leaving unsecured creditors with nothing [6] Future Plans - American Mattress is addressing cash flow problems since filing for bankruptcy and is developing an exit strategy, including plans to file an asset sale motion [7] - The parent company, AFM Mattress Company LLC, filed its Chapter 11 petition on July 6, 2025, listing assets and liabilities between $1 million and $10 million [7]