Thursday, August 11 2022

The Corsicana plant in Richmond, Virginia.

DALLAS – Mattress manufacturer Corsicana Mattress Co.. and 11 connected companies have filed for bankruptcy under Chapter 11 of the US Bankruptcy Code, and the presentation offers an inside look at the company’s struggles.

According to the filing, the company is working on a proposed asset purchase agreement with an affiliate of Blue Torch Finance like a horse bidder on the prowl. The company has proposed in court documents that Blue Torch acquire Corsicana’s assets 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 financing commitment from the debtor in possession of Blue Torch. Following Court approval, the new financing, along with cash generated from ongoing operations, is expected to allow the mattress company to continue business as usual. In the filing, Corsicana is seeking 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 new focus on core customers, renegotiate deals, flatten our organization and drive greater efficiencies across all aspects of our operations,” said Eric Rhea, Corsicana’s chief executive officer. “Our primary commitment is to serve our valued customers seamlessly, maintain partnerships with key suppliers, and operate with integrity. As a result, we will deliver high-quality sleeping products coast-to-coast to everyday Americans, handmade in the USA at the best possible price, ensuring that Corsicana’s business will remain strong for another 50 years.”

Here are three key financial facts from the court filing:

  1. As of May 30, prior to 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.
  2. The company estimates that its unsecured creditors are owed about $45 million. The filing lists Corsicana’s top 20 unsecured creditors who are owed about $20.56 million.
  3. Corsicana currently has more than $145 million in financed debt which, coupled with declining volume and subpar business performance, is unsustainable, according to the filing.

To guide the company’s restructuring, the company has appointed Michael Juniper as chief restructuring officer. Juniper is a partner of CR3 Partners, a change of course based in Dallas consultancy.

In addition to Corsicana, the 11 affiliated companies included in the presentation are: Thetford Leasing; Olive Branch Building; Eastern Sleep Products Co.; Mississippi Englander-Symbol mattress; Hylton House Furniture; Luof; Florida Mattress Symbol; Pennsylvania Mattress Symbol; Wisconsin Mattress Symbol; Symbol Mattress Transport; and Master Craft Sleep Products.

Prior to the filing, Corsicana had been cutting costs and looking to reduce its number of factories. More recently, the company announced plans to close a former Symbol Mattress factory in Richmond, Virginia. Earlier this year, Corsicana said it would close the newly opened box-bed manufacturing plant in Indiana after opening two months earlier.

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