The Corsicana factory in Richmond, Virginia.
DALLAS — Mattress maker Corsicana Mattress Co. and 11 related companies have filed for Chapter 11 bankruptcy protection under the U.S. Bankruptcy Code, and the filing offers insight into the company’s struggles.
According to the filing, the company is working on a proposed asset purchase agreement with a subsidiary of Blue Torch Finance as a straddle bidder. The company has proposed in court documents that Blue Torch acquire the assets of Corsicana through a court-supervised auction.
The plan is subject to court approval.
In addition to the proposed sale, Blue Torch has agreed to provide debtor in possession financing to the company.
In connection with the proposed sale transaction, Corsicana has received a debtor-in-possession financing commitment from Blue Torch. Once approved by the court, the new funding, along with cash generated from ongoing operations, should allow the mattress business to continue operating as usual. In the filing, Corsicana seeks approval to pay its 865 full-time and part-time employees and 58 contract employees, as well as benefit programs, during the restructuring.
“The Chapter 11 process allows Corsicana to accelerate its refocusing on its core customers, renegotiate agreements, flatten our organization and increase efficiency in all aspects of our operations,” said Eric Rhea, CEO of Corsicana. “Our primary commitment is to serve our valued customers transparently, maintain partnerships with key vendors, and operate with integrity. As a result, we will provide high-quality sleep products coast-to-coast to Americans ordinary, handcrafted in the USA at the best possible price, ensuring Corsicana’s business will be strong for another 50 years.
Here are three key financial facts from the court case:
- As of May 30 — before the June 25 court filing — the company’s unaudited balance sheets showed total assets of about $151 million and total liabilities of about $260 million.
- The company estimates that its unsecured creditors owe about $45 million. The filing lists Corsicana’s top 20 unsecured creditors who owe approximately $20.56 million.
- Corsicana currently has more than $145 million in funded debt which, coupled with declining volume and unsatisfactory business performance, is unsustainable, according to the filing.
To guide the restructuring of the business, the company appointed Michael Juniper as Chief Restructuring Officer. Juniper is a partner with CR3 Partners, a Dallas-based turnaround consultancy.
In addition to Corsicana, the 11 affiliated companies included in the file are: Thetford Leasing; Olive Branch building; Eastern Sleep Products Co.; Mississippi Englander-Symbol Mattress; Hylton Home Furniture; Luuf; Florida Mattress symbol; Pennsylvania Mattress Symbol; Wisconsin symbol mattress; Transport mattress symbol; and Master Craft sleep products.
Prior to the filing, Corsicana had cut costs and sought to reduce the number of its factories. More recently, the company announced plans to close a former Symbol Mattress factory in Richmond, Virginia. Earlier this year, Corsicana announced that it would close its new boxed bed manufacturing plant in Indiana after it opened two months prior.