Sleep Number (SNBR) enters Chapter 11 with $260M DIP and $415M sale
Rhea-AI Filing Summary
Sleep Number Corporation has filed voluntary Chapter 11 cases in New York, triggering defaults and accelerating approximately $672.5 million of debt, now stayed under bankruptcy protections. The company plans to operate as debtor-in-possession while pursuing a court-supervised sale of substantially all assets.
Prepetition lenders are expected to provide up to $260 million in debtor-in-possession financing, including up to $65 million of new-money term loans and up to $195 million of roll-up loans, bearing interest at SOFR plus 8% or base rate plus 7%. Sleep Number agreed to a $415 million cash stalking horse asset purchase agreement with a subsidiary of Sleep Country Canada, plus assumption of certain liabilities, subject to higher bids and court approval.
The company repeatedly cautions that its common shares are “significantly out of the money,” expects little or no recovery for equity holders, and anticipates its shares will be delisted from Nasdaq.
Positive
- None.
Negative
- Voluntary Chapter 11 filing with accelerated debt: Sleep Number and its subsidiaries filed for Chapter 11, causing an event of default that accelerated approximately $672.5 million of aggregate principal debt, indicating severe financial distress.
- Equity likely wiped out: The company states its common shares are “significantly out of the money,” expects a complete or significant loss for shareholders, and anticipates delisting from Nasdaq.
- Short-maturity, high-cost DIP financing: Up to $260 million of DIP financing, at SOFR plus 8% or base rate plus 7% and an expected three‑month maturity, underscores near‑term liquidity pressure and tight restructuring timelines.
- Asset sale uncertainty: The $415 million stalking horse asset sale to a Sleep Country Canada subsidiary is subject to competing bids, court and regulatory approvals, and a no–material adverse effect condition, creating execution risk.
Insights
Sleep Number enters Chapter 11 with a $415M stalking horse sale and DIP financing that likely wipes out existing equity.
Sleep Number has commenced Chapter 11 and obtained support from its existing lenders for up to $260 million in debtor-in-possession financing. This includes up to $65 million of new-money term loans and up to $195 million of rolled-up prepetition debt, at SOFR plus 8% or base rate plus 7%, maturing about three months after the DIP amendment.
The company signed a stalking horse asset purchase agreement with a subsidiary of Sleep Country Canada to sell substantially all assets for $415 million in cash plus assumed liabilities, under a Bankruptcy Court–supervised Section 363 process. The sale remains subject to higher or better bids, antitrust clearance, court approval, and a no–material adverse effect condition.
Management explicitly warns that common shares are “significantly out of the money,” expects a complete or significant loss for shareholders, and anticipates a Nasdaq delisting. Recoveries will depend on the auction outcome, DIP and prepetition claim treatment, and whether a reorganization or straight sale structure emerges from the Chapter 11 process.
8-K Event Classification
Key Figures
Key Terms
Chapter 11 Cases regulatory
debtor-in-possession financing financial
Stalking Horse Asset Purchase Agreement financial
Roll-Up Loans financial
superpriority administrative expense claim status regulatory
event of default financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement
The information set forth below in Item 1.03 of this Current Report on Form 8-K under the caption “Stalking Horse Asset Purchase Agreement” is hereby incorporated by reference in this Item 1.01.
Item 1.03 Bankruptcy or Receivership.
Voluntary Petition for Reorganization
On June 12, 2026 (the “Petition Date”), Sleep Number Corporation (“Sleep Number” or the “Company”) and its subsidiaries (together with Sleep Number, the “Debtors”) filed voluntary petitions for relief (collectively, the “Bankruptcy Petitions”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Bankruptcy Court has granted a motion seeking joint administration of the cases (the “Chapter 11 Cases”) under the caption In re: Sleep Number Corporation, et al., Case No. 26-11399. The filing of the Bankruptcy Petitions constituted an event of default under the documents governing the Amended and Restated Credit and Security Agreement (as defined in item 2.04, the “Prepetition Credit Agreement”) which accelerated the Company’s obligations under the Prepetition Credit Agreement. The Company intends to notify all known or potential creditors of the Debtors of the bankruptcy filings.
Debtor-in-Possession Financing
As a proposed amendment to the Prepetition Credit Agreement (the “DIP Amendment”; and the Prepetition Credit Agreement as amended by the DIP Amendment, the “DIP Credit Agreement”), the prepetition lenders under the Prepetition Credit Agreement (collectively, the “DIP Lenders”) are expected to provide up to approximately $260 million of debtor-in-possession financing in the form of (i) new money superpriority senior secured term loan commitments in an aggregate principal amount of up to $65 million (the term loans made thereunder, the “DIP Loans”), available in multiple draws in an amount of up to $50 million upon entry of the interim DIP order and in an amount up to the difference between $65 million and the amount of DIP Loans actually funded prior to the entry of the final DIP order and (ii) roll-up loans comprising secured obligations under the Prepetition Credit Agreement that shall be converted and exchanged into roll-up loans under the DIP Credit Agreement in an aggregate principal amount of up to $195 million (the “Roll-Up Loans”), subject to the entry of the interim DIP order and the final DIP order (as applicable).
Sleep Number’s obligations under the proposed DIP Loans and the Roll-Up Loans are expected to be guaranteed by each subsidiary of the Company. In addition, upon entry and subject to the terms of the interim DIP order approving the DIP Loans and the Roll-Up Loans (or the final DIP order, when entered), the claims of the DIP Lenders will be (i) entitled to superpriority administrative expense claim status and, subject to certain customary exclusions in the credit documentation, (ii) secured by (a) a perfected first priority lien on all DIP Collateral (as defined in the interim DIP order), to the extent such collateral is unencumbered, (b) a perfected priming senior security interest in and liens on the prepetition collateral, and (c) a perfected junior security interest in and liens on the DIP Collateral to the extent such DIP Collateral is subject to permitted prior senior liens.
Under the proposed DIP Amendment, Sleep Number is expected to be able to make optional prepayments of the DIP Loans, in whole or in part, without penalty (other than applicable breakage and redeployment costs and the payment of certain other fees, including an exit fee). In addition, subject to certain exceptions and conditions described in the proposed DIP Amendment, we will be obligated to prepay the obligations thereunder with the net cash proceeds of certain asset sales, with casualty insurance proceeds, extraordinary receipts or the proceeds of any indebtedness not permitted to be incurred pursuant to the terms of the proposed DIP Amendment.
The scheduled maturity date of the DIP Loans and the Roll-Up Loans is expected to be the date that is three months from the date of the DIP Amendment. The DIP Loans and the Roll-Up Loans are expected to bear an interest rate per annum equal to either SOFR plus 8.00% or the “base rate” plus 7.00%.
The proposed DIP Credit Agreement is expected to contain representations, warranties and covenants that are typical and customary for these types of debtor-in-possession facilities, including, but not limited to specified
restrictions on indebtedness, liens, investments, loans and guaranties, mergers and sales of assets, acquisitions, restricted payments, voluntary payments of other indebtedness, transactions with affiliates, sale and leaseback transactions and compliance with case milestones (including regarding a sale of substantially all of the assets of the Company and its subsidiaries), restrictive agreements, bankruptcy matters, cash management order and assumption or rejection of contracts and leases. The proposed DIP Credit Agreement is expected to contain customary events of default, including as a result of certain events occurring in the Chapter 11 Cases. The proposed DIP Credit Agreement is also expected to require compliance with a variance covenant that compares actual operating disbursements and receipts and capital expenditures to the budgeted amounts set forth in the DIP budgets delivered to the DIP Agents and DIP Lenders on or prior to the closing date and updated periodically thereafter pursuant to the terms of the DIP Amendment. The proposed DIP Credit Agreement is subject to approval by the Bankruptcy Court and will be subject to customary conditions precedent.
The foregoing description reflects the expected terms of the DIP Amendment and DIP Credit Agreement. However, the final terms may differ from the foregoing description and there can be no assurance that the Company will be able to successfully complete the debtor-in-possession financing on the terms described above, or at all. The foregoing description does not purport to be complete and is qualified in its entirety by reference to the DIP Amendment and DIP Credit Agreement which will be filed as exhibits to a Current Report on Form 8-K after the DIP Amendment and the DIP Credit Agreement are entered into.
Stalking Horse Asset Purchase Agreement
On June 12, 2026, the Company entered into a “stalking horse” Asset Purchase Agreement (the “Stalking Horse Purchase Agreement”) with SNBR, Inc., a wholly-owned subsidiary of Sleep Country Canada Inc. (in such capacity, the “Purchaser”) and Sleep Country Canada Inc. pursuant to which the Purchaser agreed to purchase substantially all of the assets of the Company (such assets, the “Assets,” and such transaction, the “Asset Sale”) for a purchase price of $415 million in cash and the assumption of certain liabilities, subject to certain potential purchase price adjustments, in each case, as set forth in the Purchase Agreement. The Assets to be acquired pursuant to the Asset Sale do not include, among other things, any executory leases or contracts that the Purchaser chooses to reject or are otherwise rejected in the Chapter 11 Cases. Based on the purchase price in the Stalking Horse Purchase Agreement, the common shares are significantly out of the money and would likely have no recovery.
Upon Bankruptcy Court approval, the Purchaser is expected to be approved as the “stalking horse” bidder in connection with the Asset Sale under section 363 of the Bankruptcy Code. The Asset Sale will be conducted through a Bankruptcy Court-supervised process pursuant to Bankruptcy Court-approved bidding procedures. The Asset Sale is subject to the receipt of higher or otherwise better offers from competing bidders at an auction (if applicable), approval of the Asset Sale by the Bankruptcy Court, and certain other conditions set forth in the Purchase Agreement.
The Purchase Agreement contains customary representations, warranties and covenants of the parties for a transaction involving the acquisition of assets from a debtor in bankruptcy, and the completion of the Asset Sale is subject to a number of conditions, which, among others, include (i) the entry of an order of the Bankruptcy Court authorizing and approving the Asset Sale, (ii) the performance by each party of its obligations under the Purchase Agreement (subject to certain materiality qualifiers), (iii) the accuracy of each party’s representations (subject to certain materiality qualifiers), (iv) the delivery of certain closing deliverables, (v) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (vi) the absence of any judicial or administrative proceeding by the Federal Trade Commission or the United States Department of Justice Antitrust Division that seeks to prevent, restrain, enjoin or prohibit the Asset Sale under antitrust laws, and (vii) the absence of any order by any governmental authority that restrains, enjoins, stays, or prohibits the consummation of the Asset Sale. The obligation of the Purchaser to consummate the Asset Sale is also conditioned upon the Company having not experienced a material adverse effect. The Purchase Agreement also provides for a break-up fee and expense reimbursement payable to the Purchaser upon the occurrence of certain events, and the forfeiture of a deposit to the Company upon the occurrence of certain events.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement filed hereto as Exhibit 2.1.
Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement.
As discussed in Item 1.03, on the Petition Date, the Debtors filed the Chapter 11 Cases in the Bankruptcy Court seeking relief under chapter 11 of title 11 of the Bankruptcy Code. The Debtors continue to operate their business and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The commencement of the Chapter 11 Cases constituted an event of default under the Prepetition Credit Agreement enumerated below, resulting in the acceleration of the Company’s payment obligations under those instruments. As such, substantially all of the Company’s debt, with balances of approximately $672.5 million in the aggregate principal amount as of the Petition Date, is in default and accelerated, but subject to the automatic stay under the Bankruptcy Code.
The filing of the Chapter 11 Cases constituted an event of default that accelerated the Debtors’ obligations under that certain Amended and Restated Credit and Security Agreement, dated February 18, 2018 (as amended, restated, or otherwise modified or supplemented through that certain Forbearance Agreement and Thirteenth Amendment to the Amended and Restated Credit and Security Agreement, dated as of April 27, 2026, the “Prepetition Credit Agreement”), between, amongst others, the Company as Borrower, the Lenders named therein and U.S. Bank National Association as Administrative Agent.
The Prepetition Credit Agreement described above provides that, as a result of the commencement of the Chapter 11 Cases, any principal amount, together with accrued interest thereon, are immediately due and payable. However, any efforts to enforce the payment obligations under the Prepetition Credit Agreement and such other instruments and agreements are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Prepetition Credit Agreement and such other instruments and agreements are subject to the applicable provisions of the Bankruptcy Code.
The disclosure in Item 1.03 of this Current Report on Form 8-K is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
Press Release Regarding Bankruptcy Petitions
On June 12, 2026, the Company issued a press release announcing the filing of the Bankruptcy Petitions. A copy of the press release is furnished herewith as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.
Cautionary Note Regarding the Company’s Common Shares
The Company cautions that trading in its securities (including, without limitation, the Company’s common shares) during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders of the Company’s securities in the Chapter 11 Cases. The Company expects that holders of shares of the Company’s common shares will experience a complete or significant loss on their investment, depending on the outcome of the Chapter 11 Cases. Based on the purchase price in the Stalking Horse Purchase Agreement, the common shares are significantly out of the money and would have no recovery. Additionally, as a result of the Chapter 11 Cases, the Company expects that its common shares will be delisted from trading on the Nasdaq.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K and the Exhibits hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are predictions based on our current expectations and our projections about future events, and are not statements of historical fact. Forward-looking statements include statements concerning our business strategy, among other things, including anticipated trends and developments in, and management plans for, our business and the markets in which we operate. In some cases, you can identify these
statements by forward-looking words, such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” and “continue,” the negative or plural of these words and other comparable terminology. All forward-looking statements included in this Form 8-K are based upon information available to us as of the filing date of this Form 8-K, and we undertake no obligation to update any of these forward-looking statements for any reason. You should not place undue reliance on these forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed in “Part I - Item 1A - Risk Factors” in our Annual Report on Form 10-K for the year ended January 3, 2026 as well as the additional factors included below. You should carefully consider the risks and uncertainties described under these sections.
A wide range of factors relating to the Chapter 11 Cases could materially affect future developments and performance, including but not limited to:
| • | our ability to continue as a going concern; | |
| • | our ability to successfully consummate the planned sale of the business pursuant to Section 363 of the Bankruptcy Code to any potential acquirer through an auction process in Chapter 11 and if consummated, to obtain an adequate price; | |
| • | our ability to successfully complete a reorganization under Chapter 11 and emerge from bankruptcy; | |
| • | the effects of the Chapter 11 Cases on us and on the interests of various constituents; | |
| • | bankruptcy court rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; | |
| • | the length of time the Company will operate under the Chapter 11 Cases; | |
| • | risks associated with third-party motions in the Chapter 11 Cases; | |
| • | the potential adverse effects of the Chapter 11 Cases on our liquidity and results of operations; | |
| • | increased legal and other professional costs necessary to execute our reorganization; | |
| • | the conditions to which our debtor-in-possession financing is subject, and the risk that these conditions may not be satisfied for various reasons, including for reasons outside of our control; | |
| • | the consequences of the acceleration of our debt obligations; | |
| • | employee attrition and our ability to retain senior management and key personnel due to the distractions and uncertainties, including our ability to provide adequate compensation and benefits during the Chapter 11 Cases; | |
| • | our ability to comply with the restrictions imposed by the DIP Amendment; | |
| • | the likely cancellation of our common shares in the Chapter 11 Cases; | |
| • | the potential material adverse effect of claims that are not discharged in the Chapter 11 Cases; | |
| • | the diversion of management’s attention as a result of the Chapter 11 Cases; and | |
| • | volatility of our financial results as a result of the Chapter 11 Cases. |
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number |
Description | |
| 2.1* | Asset Purchase Agreement, dated as of June 12, 2026, by and between the Company, the Purchaser and for certain sections therein, Sleep Country Canada Inc. | |
| 99.1 | Press Release, dated June 12, 2026 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
* In accordance with Item 601(a)(5) of Regulation S-K, certain schedules or similar attachments to this exhibit have been omitted from this filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
|
Sleep Number Corporation (Registrant) | ||
| Date: June 12, 2026 | By: | /s/ Samuel R. Hellfeld |
| Name: | Samuel R. Hellfeld | |
| Title: | Executive Vice President, Chief Legal and Risk Officer | |
Exhibit 99.1
Sleep Number Enters Asset Purchase Agreement
to Combine with Sleep Country Canada, Creating an
Industry Leader in North America
Initiates Court-Supervised Sale Process to Facilitate Transaction
Expects to Receive New Financing to Support Ongoing Operations
During Court-Supervised Sale Process
Sleep Number is Continuing to Serve New and Existing Customers
MINNEAPOLIS – June 12, 2026 – Sleep Number Corporation (Nasdaq: SNBR) today announced that it has entered into an agreement to combine with Sleep Country Canada to create a leading North American mattress and bedding company. The transaction will enable the combined company to provide consumers across the United States and Canada a broader assortment of innovative sleep products and services in stores and online. To facilitate the combination, Sleep Number initiated a voluntary Chapter 11 sale process.
Through this process, Sleep Number fully expects to continue its day-to-day operations, including serving customers with its newest product, servicing warranties and delivering mattresses in homes. Customers can continue to shop for the company’s products online and in stores nationwide and, following the close of the transaction, Sleep Number plans to continue to assemble its products in the United States.
Linda Findley, President and Chief Executive Officer of Sleep Number, said, “For 40 years, Sleep Number has been a leader in sleep innovation, helping millions of customers improve their health and well-being through personalized sleep solutions. While we have made meaningful progress advancing our turnaround efforts and strengthening our operations, our capital structure remains unsustainable. Following a comprehensive review of our strategic options and a robust sale process, we are confident that moving forward with the Sleep Country Canada agreement and this court-supervised sale process will enable us to address our financial constraints. It will also position us to expand our business, helping more people achieve their best sleep both in the United States, and through future international expansion.
Findley continued, “As we move through this process, we are focused on serving our customers and supporting our partners. Our team is dedicated to advancing our new product line and continuing to serve current and future customers every day. We thank them, along with our partners and suppliers, for their continued support.”
Stewart Schaefer, President and Chief Executive Officer of Sleep Country Canada, said, “We have long admired Sleep Number, its game-changing personalized sleep products and the talented team behind them. Together, we see a tremendous opportunity to build on our complementary strengths and accelerate growth across the United States while introducing Sleep Number's innovative sleep solutions to consumers in Canada and other markets. We are excited about what we can accomplish together and the ways we can help support the wellbeing of our customers through every stage of their sleep wellness journey.”
Continuing to Serve Customers in Stores and Online
Throughout this process, Sleep Number fully expects to continue serving customers:
| · | Sleep Number stores are open and operating during their regular business hours. |
| · | The company’s online channel, SleepNumber.com, is accepting new orders. |
| · | The company is fulfilling and delivering orders, standing behind its 100-night trial and honoring its warranties, gift cards and Sleep Number Reward points and store credits. |
| · | The infrastructure supporting Sleep Number’s connected smart beds and App will remain operational as they are today. |
| · | Customers can continue to reach customer service and home delivery teams through all normal support channels. |
Sleep Number is also continuing its turnaround strategy to spur growth and increase financial resilience. The company recently completed the largest product redesign in nearly a decade, launched its first major integrated marketing campaign in years, and continues to right-size the fixed cost base.
Additional Information Regarding the Court Supervised Process
Sleep Number initiated a voluntary Chapter 11 sale process in the U.S. Bankruptcy Court for the District of New York. The transaction is being undertaken pursuant to Section 363 of the U.S. Bankruptcy Code.
As part of this process, Sleep Country Canada will serve as the “stalking horse” bidder in a court-supervised sale process. Accordingly, the proposed transaction is subject to higher and better offers, Court approval and other closing conditions.
Sleep
Number expects to secure up to $260 million of debtor-in-possession (“DIP”) financing, including up to $65 million
in new financing. Following court approval, this DIP financing, combined with cash generated from Sleep Number’s ongoing operations,
is expected to support the business during the court-supervised process.
The company has filed a number of customary motions seeking Court authorization to support its operations during the court-supervised process, including the payment of employee wages and benefits without interruption. Sleep Number fully expects to pay suppliers for goods and services provided after the filing date.
Sleep Number has already been undertaking a review of its store footprint and, in connection with this process, the company will continue this work with the intention of maintaining the vast majority of locations based on profitability. A&G Real Estate Partners is assisting the company with this effort. In connection with the start of the court-supervised process, Sleep Number has filed a motion with the Court to reject leases of 44 non-operational locations, which were already closed and not serving customers.
Additional information regarding the court-supervised sale process is available at forward.sleepnumber.com. Court filings and other information related to the proceedings are available on a separate website administered by the company’s claims agent, Kroll, at https://restructuring.ra.kroll.com/SleepNumber, by calling toll-free at (844) 408-3387 (or +1 (646) 825-3128 for calls originating outside of the U.S.), or by sending an email to SleepNumberInfo@ra.kroll.com.
Advisors
Sleep Number is advised by Davis Polk & Wardwell LLP as legal advisor, Guggenheim Securities, LLC as investment banker, AP Services, an affiliate of AlixPartners, as interim management and Joele Frank, Wilkinson Brimmer Katcher as strategic communications advisor.
Sleep Country Canada is advised by Goodwin Procter LLP as legal advisor and PwC as financial advisor.
About Sleep Number Corporation
Sleep Number® is the leader in personalized sleep wellness. Its mattresses are designed to evolve with each sleeper to help them feel and perform their best. With adjustable firmness, pressure-relieving support and temperature balancing comfort built into every mattress, Sleep Number beds adapt to customers’ changing needs, night after night, year after year.
Backed by almost 40 years of innovation, 1,000+ patents and patents pending, and billions of hours of sleep data, Sleep Number has helped more than 16 million people achieve their best sleep. The fully integrated model ensures quality, durability, and care at every step—from design and craftsmanship to delivery and long-term support.
Sleep Number products are awarded the industry's top recognitions, including ranked #1 in customer satisfaction for mattresses purchased in-store and online, and #1 in comfort, by J.D. Power. In addition, the company is the Official Sleep + Wellness Partner of the NFL, marking a relationship that leverages players, team partnerships, and league-wide initiatives to amplify brand awareness and drive consumer engagement.
Sleep Number mattresses, bases, bedding, and furniture are available exclusively at its over 570 stores nationwide and online. To learn more, visit SleepNumber.com or a store near you.
Cautionary Note Regarding the Company’s Common Shares
The Company cautions that trading in its securities (including, without limitation, the Company’s common shares) during the pendency of the Chapter 11 cases is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders of the Company’s securities in the Chapter 11 Cases. The Company expects that holders of shares of the Company’s common shares will experience a complete or significant loss on their investment, depending on the outcome of the Chapter 11 Cases. Based on the purchase price in the sale agreement, the common shares are significantly out of the money and would have no recovery. Additionally, as a result of the Chapter 11 Cases, the Company expects that its common shares will be delisted from trading on the Nasdaq.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are predictions based on our current expectations and our projections about future events, and are not statements of historical fact. Forward-looking statements include statements concerning our anticipated combination with Sleep Country Canada and our
business strategy, among other things, including anticipated trends and developments in, and management plans for, our business and the markets in which we operate. In some cases, you can identify these statements by forward-looking words, such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” and “continue,” the negative or plural of these words and other comparable terminology. All forward-looking statements included in this press release are based upon information available to us as of the filing date of this Form 8-K, and we undertake no obligation to update any of these forward-looking statements for any reason. You should not place undue reliance on these forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed in “Part I - Item 1A - Risk Factors” in our Annual Report on Form 10-K for the year ended January 3, 2026 as well as the additional factors included below. You should carefully consider the risks and uncertainties described under these sections.
A wide range of factors relating to the Chapter 11 Cases could materially affect future developments and performance, including but not limited to:
| • | Our ability to continue as a going concern; | |
| • | Our ability to successfully consummate the planned sale of the business pursuant to Section 363 of the Bankruptcy Code to any potential acquirer through an auction process in Chapter 11 and if consummated, to obtain an adequate price; | |
| • | Our ability to successfully complete a reorganization under Chapter 11 and emerge from bankruptcy; | |
| • | The effects of the Chapter 11 Cases on us and on the interests of various constituents; | |
| • | Bankruptcy court rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; | |
| • | The length of time the Company will operate under the Chapter 11 Cases; | |
| • | Risks associated with third-party motions in the Chapter 11 Cases; | |
| • | The potential adverse effects of the Chapter 11 Cases on our liquidity and results of operations; | |
| • | Increased legal and other professional costs necessary to execute our reorganization; | |
| • | The conditions to which our debtor-in-possession financing is subject, and the risk that these conditions may not be satisfied for various reasons, including for reasons outside of our control; | |
| • | The consequences of the acceleration of our debt obligations; | |
| • | Employee attrition and our ability to retain senior management and key personnel due to the distractions and uncertainties, including our ability to provide adequate compensation and benefits during the Chapter 11 Cases; | |
| • | Our ability to comply with the restrictions imposed by the DIP Credit Agreement; | |
| • | The likely cancellation of our common shares in the Chapter 11 Cases; | |
| • | The potential material adverse effect of claims that are not discharged in the Chapter 11 Cases; | |
| • | The diversion of management’s attention as a result of the Chapter 11 Cases; and | |
| • | Volatility of our financial results as a result of the Chapter 11 Cases. |
Investor Contact: investorrelations@sleepnumber.com
Media Contact: Muriel Lussier, muriel.lussier@sleepnumber.com; Aaron Palash / Viveca Tress / Carly King, Joele Frank, Wilkinson Brimmer Katcher, SleepNumberMedia@joelefrank.com