Channel: Daily Bankrupt Company Updates | Bankrupt Company News
Viewing all articles
Browse latest Browse all 4593

Corsicana Bedding, LLC – Mattress Manufacturer Seeks Approval of Bidding Procedures and Stalking Horse Arrangements with Blue Torch Finance ($125mn Credit Bid); Aims for August 24th Sale Hearing


June 29, 2022 – The Debtors filed a motion requesting each of a bidding procedures order and a sale order. The bidding procedures order would: (i) approve bidding procedures for the sale of substantially all of the Debtors' assets (the “Sale”), (ii) authorize the Debtors to enter into stalking horse arrangements with Corsicana Acquisition LLC (the “Stalking Horse Bidder,” $125.0mn credit bid), (iii) approve limited bid protections for the Stalking Horse Bidder (i.e., only an expense reimbursement) and (iv) approve a proposed auction/sale timetable culminating in an auction on August 18th and a sale hearing on August 24th [Docket No. 68]. The sale order would approve the Sale. A copy of the stalking horse APA is attached to the motion as Exhibit B.

On June 25th, Corsicana Bedding, LLC and 11 affiliated Debtors (“Corsicana” or the “Debtors”) filed for Chapter 11 protection noting estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $100.0mn and $500.0mn. At filing, the Debtors, a Dallas-based mattress manufacturer, cited an "ongoing slump in the mattress industry, reduced consumer spending and increased production costs" necessitating bankruptcy shelter and their intention to pursue a section 363 sale process with an acquisition entity created by prepetition lender Blue Torch Finance, LLC serving as a credit bidding stalking horse.

In a press release announcing the filing, the Debtors advised that: “Corsicana Mattress Company and certain of its affiliated entities filed for voluntary reorganization today under Chapter 11 of the U.S. Bankruptcy Code in the Northern District of Texas in Fort Worth. The filing indicated that Corsicana will be filing a proposed asset purchase agreement with an affiliate of Blue Torch Finance, LLC to acquire the Company's assets through a court-supervised auction and sale process under section 363 of the Bankruptcy Code. The proposed transaction is subject to Court approval.

In connection with the proposed sale transaction, Corsicana has received a commitment for debtor-in-possession financing from Blue Torch. Upon Court approval, the new financing, together with cash generated from the Company's ongoing operations, is expected to enable the mattress company to continue operating as usual and continue to maintain its high standards of quality and customer service. The Company has sought approval to remit employee pay and continue certain Court-approved benefit programs uninterrupted."

The Bidding Procedures Motion

The motion [Docket No. 68] states, “The Debtors’ successful exit from Chapter 11 depends in large part on the ability to complete a swift process for the marketing and sale of their business as a going concern. For the past several months, the Debtors’ management has been engaged in significant strategic and financial efforts to maintain the Debtors’ business in the face of intense competition in the mattress segment, general industry volume decline, and overleveraged capital structure. Despite these efforts, the Debtors do not have the capital necessary to remain competitive in this space. The Debtors seek to sell their business to a third party that has the resources needed to execute strategies to ensure that the Debtors maintain a position of competitive prominence.

The Debtors have engaged Houlihan Lokey (‘Houlihan’) as their investment banker to assist them in conducting a marketing and sale process. After engaging in arm’s length negotiation with representatives of the Stalking Horse Bidder, the Debtors have concluded that seeking approval of the Stalking Horse APA and the transactions contemplated thereunder will allow the Debtors to maximize value for their estates…

The timetable described herein is critical to a successful resolution of these cases and is necessary to maximize recovery to the Debtors’ creditors. The need for urgency is created by, among other things, (i) the Debtors’ inability to satisfy certain covenants and obligations under the Debtors’ pre-petition debt instruments; (ii) a lack of short and long-term liquidity; (iii) the risk of termination of the Debtors’ leases and other critical contractual relationships based on the Debtors’ pre-petition inability to remit certain amounts due to certain landlords and other counterparties; and (iv) the desperate need for funding for ongoing operations, which funding is not readily available absent a comprehensive rationalization of the Debtors’ operations and a resolution of the Debtors’ financial situation. If the Debtors are unable to complete the sales process and consummate a transaction within the timeframe described herein, their ability to continue as a going concern will be substantially diminished.”

Key Terms of the Stalking Horse APA:

  • Sellers: Debtors and non-Debtor Affiliates Eastern Sleep – Poinciana, LLC; Eastern Sleep – Fort Wayne, LLC; Chesterfield Landco, LLC and Symbol Mattress – Las Vegas LLC.
  • Purchaser: Corsicana Acquisition LLC, an acquisition entity created by prepetition (and now DIP) lender Blue Torch Finance, LLC.
  • Purchase Price: A credit bid of $125.0mn comprised of outstandings under the Debtors' Prepetition Term Loan ($129.4mn) and the Debtors' debtor-in-possession ("DIP") note ($18.0mn with final DIP order) AND cash of $200k. Amounts in excess of the $125.0mn credit bid (the "Retained Obligations") to remain outstanding following a sale transaction.
  • Bidder Protections: The sole form of bid protection required by the Stalking Horse Bidder is the up to $1.0mn expense reimbursement. There is also an incremental bid requirement of $1.0mn; such that in aggregate bidder protections any further qualified bid must "include cash consideration equal to or greater than $127,200,000 (i.e. the sum of (a) the Purchase Price plus (b) the Expense Reimbursement, plus (d) the $1 million Initial Overbid Increment)"

Key Dates

  • Bid Deadline: August 15, 2022
  • Auction: August 18, 2022
  • Sale Objection Deadline: August 22, 2022
  • Sale hearing: August 24, 2022

A hearing to consider the motion is scheduled for July 27, 2022, with objections due by July 24, 2022.


Prepetition Indebtedness

Corsicana’s prepetition debt structure primarily consists of: (i) the Prepetition Term Loans, and (ii) the Prepetition ABL Debt. The Debtors also have outstanding obligations under various lease agreements and owe certain amounts to vendors and other general unsecured creditors.

  • ABL Facility. Corsicana Bedding, LLC and certain of its affiliates designated therein, as borrowers, Corsicana Parent Co., LLC,  certain other parties (including, without limitation, Holdings) designated as “Guarantors” thereto (such parties, collectively, the “Prepetition ABL Obligors”), the financial institutions from time to time party thereto (collectively, the “Prepetition ABL Lenders”), and Wingspire, as administrative agent (in such capacity, the “Prepetition ABL Agent”), are parties to that certain Credit Agreement, dated as of April 28, 2021 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “Prepetition ABL Credit Agreement”). As of the Petition Date, approximately $18,545,929.18 in principal was outstanding under the Prepetition ABL Facility in the form of “Loans," plus interest accrued and accruing.
  • Term Obligations. Corsicana Bedding, as borrower, and certain of its affiliates designated therein as “Guarantors, each “Lender” from time to time party thereto and Blue Torch, as administrative agent and collateral agent, are parties to that certain Financing Agreement, dated as of April 28, 2021 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “Prepetition Term Loan Agreement"). As of the Petition Date, approximately $129,407,386.16 of indebtedness under the Prepetition Term Loan Agreement was outstanding, which amount includes the Applicable Premium (as such term is defined in the Prepetition Term Loan Agreement) in the amount of $2,512,717.34, capitalized interest in the amount of $161,419.83, and accrued and unpaid interest through the Petition Date in the amount of $1,097,382.22.
  • As of the Petition Date, the Debtors estimate that the total amount owed to general unsecured creditors is approximately $45,000,000.

About the Debtors

According to the Debtors: “Founded in 1971 in Corsicana, Texas, Corsicana Mattress operates ten factories across the country and has become one of the mattress industry's largest manufacturers. The Company offers a full range of promotional and step-up products that feature the latest in sleep technology, including innerspring, memory foam and hybrid models. The Company also has mattress-in-a-box programs that simplify delivery. In 2021, Corsicana acquired Richmond, Virginia-based Symbol Mattress, creating the nation's largest manufacturing organization serving consumers looking to purchase mattresses for under $3,000. Corsicana leverages its national manufacturing presence to provide industry-leading quality, value, delivery, and customer service."

Read more Bankruptcy News

The post Corsicana Bedding, LLC – Mattress Manufacturer Seeks Approval of Bidding Procedures and Stalking Horse Arrangements with Blue Torch Finance ($125mn Credit Bid); Aims for August 24th Sale Hearing appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.

Viewing all articles
Browse latest Browse all 4593

Latest Images

Trending Articles

Latest Images