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Turnaround Leads to Debt Restructuring for Mattress Retailer

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Home·Turnaround Leads to Debt Restructuring for Mattress Retailer

The Situation

Specialty mattress retailer. $50 million in sales. $5 million debt. 100+ locations in two states (IL, IN) and three metro areas (Chicago, Indy & Ft. Wayne). Approximately 200 employees.

  • Double-digit year-over-year same-store sales declines.
  • Liquidity position and bloated cost structure necessitated a dramatic reduction in ad spend.
  • Competition, coupled with a lack of advertising, negatively impacted sales and store traffic.
  • Tried to grow out of trouble (did not address the underlying business problem and simply added to the cost structure).
  • The majority of stores were not profitable (in general, occupancy costs as a % of net sales were too high).
  • Lack of communication eroded trust and credibility with landlords, advertisers, and suppliers.
  • Owners/operators' incentives are not aligned with creditors.
  • Burning approximately $350k of cash per month (two months of cash remaining).

How We Advised

Our experts served as restructuring advisors and subsequently CRO and CFO.

  • Evaluated strategic alternatives, including a capital infusion, sale of the business (in Section 363 and out-of-court), and filing for Ch. 11.
  • Negotiated rent concessions and lease buyouts with landlords.
  • Reduced store footprint to approximately 70 locations through buyouts and “going dark.”
  • Addressed the bloated cost structure by significantly reducing management compensation, eliminating approximately 75 team members (through a reduction-in-force and store closures), and reducing remaining team members' compensation.
  • Managed communications and negotiations with stakeholders.
  • Provided much-needed cash management to prioritize cash disbursements.
  • Extended life of the Company through significant negotiated concessions and dramatic internal cash savings initiatives, allowing the Company to dual track either an additional capital infusion or sale of business in an effort by ownership to avoid Ch. 11.
  • Raised additional capital to stave off Ch. 11 and provide management runway to stabilize the top line.
  • Sale of the lender’s secured, unsecured, and equity/member interest positions for a 50% premium over the expected recovery in a Ch. 11 or liquidation.

Key Contact

Dan F. Dooley, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 603 660 8952 
[email protected] 

Related Practice Areas

> Chief Restructuring Officer (CRO) and Interim Management Services 
Our experienced C-suite interim executives advise and support companies in financial distress, experiencing hypergrowth, or that are challenged by critical vacancies among senior leadership. Whether the leadership void results from operating challenges, a recent officer resignation, the need for added support during busy periods, or during an extended job search for the right permanent hire, our experienced executives provide immediate relief and value. 

 

> Debt Restructuring Services 
When a company is in financial distress, our Strategic Advisory experts design and implement debt restructuring and refinancing strategies tailored to the company’s unique circumstances. We help middle-market businesses stabilize operations, improve liquidity, and optimize their capital structures. 

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J.S. Held

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50 Jericho Quadrangle
Suite 117
Jericho, N.Y. 11753
+1 516 621 2900
[email protected]

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© 2025 J.S. Held LLC.  

All Rights Reserved.

J.S. Held, its affiliates and subsidiaries are not certified public accounting firm(s) and do not provide audit, attest, or any other public accounting services. J.S. Held is not a law firm and does not provide legal advice. Securities offered through PM Securities, LLC, d/b/a Phoenix IB or Ocean Tomo Investments, a part of J.S. Held, member FINRA/SIPC. All rights reserved.
J.S. Held

Headquarters

50 Jericho Quadrangle
Suite 117
Jericho, N.Y. 11753
+1 516 621 2900
[email protected]

J.S. Held, its affiliates and subsidiaries are not certified public accounting firm(s) and do not provide audit, attest, or any other public accounting services. J.S. Held is not a law firm and does not provide legal advice. Securities offered through PM Securities, LLC, d/b/a Phoenix IB or Ocean Tomo Investments, a part of J.S. Held, member FINRA/SIPC. All rights reserved.
Markets Served

Geographies

Industries

Media Relations

[email protected]

 

© 2025 J.S. Held LLC.  

All Rights Reserved.

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