Jessup, Maryland - US mattress maker Classic Sleep Products filed a Chapter 11 petition 4 Jan in the US Bankruptcy Court for the District of Maryland, asking approval to sell the company's assets to a new company Classic Brands llc. Classic ceo Mike Zippelli, explained in a 4 Jan announcement that the Chapter 11 process was necessary for Classic to separate itself from its parent, Dormia Inc., which had operated more than 30 stores until shortly after it filed for Chapter 11 18 months ago.
The new company will gain $10 million in new financing and Classic's long-time Chinese manufacturing partner will have an equity stake in the new company, the company said, in its 4 Jan announcement. The statement said the plan "creates a unique opportunity for Classic to solidify its position as the leading value mattress brand in the US."
The company also said there would be no disruption of service to customers, vendors or suppliers, adding that it expects to exit Chapter 11 rapidly.
Under the plan, the current management team, led by Zippelli, will increase its majority ownership stake in the business with funding provided by JMX Capital Partners and Classic's senior lender, CIT Financial.
"We see this move as a very exciting opportunity to solidify Classic's position as the leading value brand in the US. This strong infusion of capital will strengthen our current business and position the company for dynamic future growth," said Zippelli.
"We have worked closely with our Chinese supplier for many years. We are designing mattresses and they are building beds to the same specifications we use in our Jessup facility, but at pricing that delivers greater value to the consumer," Zippelli continued. "The cost differential gives us a unique strategic advantage by enabling us to include features at the under $1500 price point at quality levels that are impossible to produce domestically."
Classic Sleep Products makes bedding products and accessories using all-natural and high-performance covers, lamb's wool, Talalay and Dunlop latex, and viscoelastic polyurethane foam.