The downturn in the furniture retail industry has led major home furnishing companies to close stores and file for Chapter 11 bankruptcy protection to restructure their businesses.
The furniture industry said sales fell due to a multi-year housing market downturn, while inflation and rising tariffs drove up product and labor costs, cutting into sales and profits for furniture companies.
The mattress subsector of the furniture industry has not been immune to economic problems, as retailers need to file for bankruptcy to restructure their crippling debt.
Bankrupt mattress retail chain American Mattress is battling its unsecured creditors, who filed a motion in January to change the retailer’s Chapter 11 reorganization to a Chapter 7 liquidation.
The Official Committee of Unsecured Creditors claimed in its Jan. 28 motion to convert that the debtors had made no meaningful progress toward restructuring, had not submitted a reorganization plan and were operating without reliable financial forecasts, business plans or independent financial oversight.
The U.S. Trustee also filed a motion on Jan. 30 to convert the bankruptcy case to Chapter 7 or to dismiss it because the debtors failed to pay rent on the leased store, failed to pay professional fees and had recorded operating losses of $1.26 million since November.
However, the Elk Grove Village, Ill.-based furniture chain, which operates 45 stores in four states including Illinois, Indiana, Michigan and Florida, filed an objection in the U.S. Bankruptcy Court for the District of Delaware on March 3, 2026, rebutting the Chapter 7 conversion filing, claiming the buyer had offered to purchase its assets and pay for all treatment costs, Furniture Today reported.
American Mattress said in its dissent that if its case is converted or dismissed, only secured lenders may receive payment, while unsecured creditors would receive nothing.
Furniture Today said a hearing on the matter was scheduled for March 5, but a ruling on the motion had not been issued at last check.
In its dissent, American Mattress said the company has had cash flow issues since filing for bankruptcy and said it is addressing the issue and developing a bankruptcy exit strategy. The company also plans to file an asset sale motion, the report said.
The debtor’s parent company, AFM Mattress Company LLC, filed a Chapter 11 petition on July 6, 2025, listing assets and liabilities of $1 million to $10 million and seeking to reorganize its business and restructure debt.
