The parent company of Sleep Outfitters, Innovative Mattress Solutions, filed for bankruptcy on Friday in Kentucky.
According to the filing in federal bankruptcy court, Lexington-based IMS is seeking Chapter 11 bankruptcy protection for reorganization.
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Innovative Mattress Solutions also owns Mattress Warehouse and Mattress King. Founded by owner Kim Knopf, the company has 143 stores and more than 400 employees, according to its website.
“Our stores are open for business as usual, and we are focused on taking care of our valued customers,” said CEO Knopf in a statement. “IMS now has the backing of Tempur Sealy, one of the biggest and best-known mattress manufacturers, and a longtime supplier partner of our company.“
Lexington-based Tempur Sealy, a publicly traded company, announced Friday that it is providing up to $14 million in debtor-in-possession financing to IMS to facilitate the bankruptcy, subject to the court’s approval.
According to Tempur Sealy, Innovative Mattress Solutions has indicated the restructuring “will include optimizing its portfolio of retail locations, and is anticipated to be completed during the first half of 2019.”
The company did not say which stores or how many might be closed or sold.
Tempur Sealy is IMS’ largest creditor with more than $19 million in unsecured claims. According to the bankruptcy filing, IMS has between $10 million and $50 million in liabilities with $10 million to $50 million in estimated assets.
Tempur Sealy International chairman and CEO Scott Thompson said in a release: “Innovative Mattress Solutions has served over a million consumers and built equity for their and our brands in their markets. However, we believe iMS’ overextended retail footprint and thin capital structure were not designed to effectively respond to the competitive pressures of the recent retail environment. “This caused the unexpected need for bankruptcy protection. We will review strategic alternatives related to iMS during its bankruptcy process with a focus on what is best for Tempur Sealy consumers in the affected markets.”
Innovative Mattress Solutions operates stores in Kentucky, West Virginia, Ohio, Indiana, Tennessee and Alabama, according to its website.
Major competitor Mattress Firm filed for bankruptcy in October with plans to reject up to 700 leases and close about 200 stores.