Bankruptcy

It’s 1-800-Bankrupt

Dial-a-Mattress is one of several more consumer-oriented companies to file for Chapter 11 this week, joining Sportsman's Warehouse and Bi-Lo markets.
Stephen TaubMarch 24, 2009

Constricted consumer spending has taken a severe toll on companies that serve those markets. Hence, the spate of bankruptcy filings among consumer-oriented firms of late. This week, add Dial-a-Mattress International Ltd., best known for its 1-800-Mattress retail sales number.

Its petitions for Chapter 11 bankruptcy listed less than $50,000 in both debt and assets, according to the Bloomberg News, which noted that the company had faced involuntary bankruptcy after three creditors filed a Chapter 7 petition against Dial-a- Mattress on March 17. The three creditors — including Sealy Corp., the world’s largest bed maker, and Blue Bell Mattress — are owed nearly $1.7 million, according to Reuters.

This is not the first bedding company to file for bankruptcy in the current economic downturn. Maryland-based Mattress Discounters filed for Chapter 11 last year, and Foamex International Inc., which makes foam bedding products, filed for bankruptcy protection in February.

Elsewhere, Sportsman’s Warehouse Inc. filed voluntary petitions for reorganization under Chapter 11. The outdoor sports retailer said the filing is part of the company’s efforts to address financial challenges and identify a strategic or financial investor.

To help fund its business during the bankruptcy proceedings, Sportsman’s said it has secured a commitment for an $85 million debtor-in-possession financing facility from GE Capital Corp., which includes an option for exit financing.

Retailers specializing in big-ticket items are not the only ones struggling. Bi-Lo, a grocery chain in the South, said that it filed a Chapter-11 petition, with the company, owned by private-equity investor Lone Star Funds, saying that it intends to use the court-supervised process to address an upcoming debt maturity. Bi-Lo has a $260 million term loan maturing March 26, according to Bloomberg, which cited court documents.

The petition identified 20 creditors that are owed $36.3 million. The three largest listed are C&S Wholesale Services Inc., owed $16.7 million; Pepsi-Cola Co., $3.07 million; and Piedmont Coca-Cola Bottling, $2.39 million, according to Bloomberg.

“On an operational level, we are making significant progress this year and we have seen solid sales momentum and strong cash flow,” said Michael Byars, president and CEO of Bi-Lo. “Our strong operations and liquidity position continue to demonstrate the strength of our business model, and the company has continuously satisfied all of its obligations to date, under the term loan and otherwise.” In a normal credit environment the company would expect to refinance the maturing term loan on reasonable terms in the ordinary course of business, he said.

The company listed assets and debt of as much as $1 billion in Chapter 11 documents filed voluntarily today in U.S. Bankruptcy Court in Spartanburg, South Carolina, according to Bloomberg. Bi-Lo also said that it had received a commitment for a $100 million DIP facility arranged by GE Capital. The financing will be used to support the company’s operational cash flow to meet its normal business obligations, it added.