US-based speciality retailer Mattress Firm, along with its subsidiaries, has filed voluntary Chapter 11 restructuring in the US Bankruptcy Court in Delaware.
The restructuring plan will allow the retailer to implement a pre-packaged plan of reorganisation and offers new financing opportunities to support the business.
Mattress Firm also plans to close 700 economically inefficient store locations as well as pay all trade creditors in full for goods and services provided.
Mattress Firm executive chairman, president and CEO Steve Stagner said: “The process we have initiated today will allow us to strengthen our balance sheet and accelerate the optimisation of our store portfolio. Leading up to the holiday shopping season, we will exit up to 700 stores in certain markets where we have too many locations in close proximity to each other.
“We intend to use the additional liquidity from these actions to improve our product offering, provide greater value to our customers, open new stores in new markets, and strategically expand in existing markets where we see the greatest opportunities to serve our customers.”
As part of its store optimisation plan, the retailer has filed motions with the court seeking authority to reject up to 700 leases.
The company will close approximately 200 stores in the next few days and announce the additional store closings in the coming weeks.
In addition, Mattress Firm has received commitments for approximately $250m in debtor-in-possession financing to support its ongoing operations during the Chapter 11 proceedings.
It has also obtained commitments for $525m of senior secured credit facilities enabling it to emerge from Chapter 11 and support operations thereafter.
The retailer expects to complete the prepackaged restructuring process within the next 45 to 60 days.