Serta Simmons fights creditor group’s attempt to stay confirmation

By Sarah Lizee

Olympia, Wash., June 20 – Serta Simmons Bedding, LLC responded to motions to stay confirmation of its pre-packaged Chapter 11 plan of reorganization from creditor Citadel Equity Fund Ltd. and a group of minority non-term loan lenders in documents filed Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan was confirmed on June 6, as previously reported.

The motions for stay relate to a dispute over a 2020 transaction between the company and majority lenders that resulted in subordination of claims of other creditors. The minority lenders and Citadel say the confirmation order should be stayed pending resolution of an appeal regarding the transaction.

The company argued that the parties haven’t made a serious effort to establish that they are entitled to the extraordinary relief they seek, despite asking the court to stay confirmation of the billion-dollar restructuring.

“In order to show they are entitled to the remedy of a stay pending appeal, Citadel and the non-PTL lenders have to establish extraordinary circumstances, but their perfunctory briefs barely attempt to justify the relief they seek, and completely ignore the near catastrophic harm to the estates if a stay is granted,” Serta said in the response.

“Instead, Citadel and the non-PTL lenders make the ludicrous claim that a stay will not cause any harm to the estates and will in fact ‘benefit’ the debtors because it may potentially eliminate the overhang of an indemnity that may or may not ever be triggered.”

Serta said that if the court were inclined to grant a stay, the stay must be secured by a bond of at least $2.57 billion to protect the debtors from losses.

“It is time for Serta Simmons Bedding to put these issues to bed and allow it to emerge from Chapter 11 with a fresh start,” the company said.

Serta, an Advent International portfolio company, is an Atlanta-based manufacturer and distributor of mattresses. It filed bankruptcy on Jan. 23 under Chapter 11 case number 23-90020.

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