Serta Simmons Bedding is seeking bankruptcy protection in an effort to trim its debt load following an earlier out-of-court restructuring.

The Atlanta-based mattress maker filed in the Southern District of Texas on Monday. The Chapter 11 filing allows Serta to continue operating while implementing a deal, backed by a majority of lenders and shareholders, to cut its debt to $300 million from $1.9 billion, the company said in a statement.

Serta’s fiscal woes were exacerbated during the pandemic. More recently decades-high inflation has weighed on the mattress retailer, which has a sizeable debt load maturing this year.

Serta is No. 681 on the Digital Commerce 360 Top 1000, a ranking of the top retailers in North America based on online revenue.

The 17 mattress retailers in Digital Commerce 360’s Top 1000, a ranking of the top retailers in North America based on online revenue, combined to generate $5.20 billion in online sales in 2021. That’s up from $4.31 billion in 2020. Figures for 2022 are not yet available.

The leader in online mattress sales is Resident (Nectar Sleep), ranked No. 116 in the Top 1000. Rounding out the top five are Tempur Sealy International Inc. (No. 159), Purple (No. 176), Casper Sleep Inc. (No. 180) and Leesa Sleep LLC (No. 222). These retailers collectively generated $2.63 billion in digital revenue in 2021, accounting for more than half — 50.7% — of the combined online sales of Top 1000 mattress retailers.

Serta’s second restructuring in less than three years

The company’s restructuring plan, which is subject to court approval, includes an $125 million debtor-in-possession asset-based loan, court papers show. The firm has also secured a commitment of $125 million in the same form once its exits bankruptcy.

Serta requested approval to pay back suppliers either during the bankruptcy or after it completes the process. Nearly all of its top unsecured creditors are suppliers, with the top creditor owed more than $17 million, the filings show.

Serta agreed on a previous restructuring with creditors in 2020 that added $200 million of fresh capital while allowing some lenders to jump to the front of the repayment line. Other lenders were pushed back, a process known as priming. A group of funds including Angelo Gordon & Co. and Apollo Global Management sued Serta and rival lenders in the hopes of invalidating the transaction.

The firm listed assets of $1 billion to $10 billion and liabilities in the same range in its petition. The company’s debt, which stems from a roughly $3 billion leveraged buyout by Advent International in 2012, has hobbled the retailer. Confidential talks over a restructuring plan started late last year, Bloomberg earlier reported.

Serta is working with advisers Weil, Gotshal & Manges, Evercore Group and FTI Consulting, according to the statement. Gibson Dunn & Crutcher and Centerview Partners are advising creditors, while Ropes and Gray are working with Advent.

The case is Serta Simmons Bedding LLC, 23-90020, US Bankruptcy Court for the Southern District of Texas.

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