Sleep Number Files Chapter 11, Stock Crashes 40%, June 14

Sleep Number Corporation filed for Chapter 11 bankruptcy protection on June 12, 2026, in U.S. Bankruptcy Court for the Southern District of New York. The 39-year-old Minneapolis mattress maker has agreed to sell substantially all assets to Sleep Country Canada for $415 million, subject to a court auction on July 13. The stock has fallen 40% in one day to $0.39 USD, and investors face near-total losses on equity.

Why Sleep Number Filed for Bankruptcy

Sleep Number carried approximately $672.5 million in funded debt when it filed. This included roughly $475 million outstanding under a revolver, $177.5 million under a 2021 term loan, and an additional $20 million term loan entered in 2026. CEO Linda Findley stated the company’s capital structure required restructuring, though operations had shown progress. The $415 million stalking-horse bid leaves common shareholders significantly out of the money.

What Happens to Stores and Customers

Sleep Number operates 572 stores across the United States. All stores remain open during the bankruptcy process, and vendors continue to get paid. The company secured up to $260 million in court-approved debtor-in-possession financing to keep operations running. However, unsecured promises like 15-year warranties can be renegotiated or reduced by the court during a Chapter 11 sale.

The Auction and Timeline

Sleep Country Canada is the lead bidder, sometimes called the stalking horse. The court has set an auction for July 13, 2026, in case a higher bid emerges. Sale approval is targeted around July 15, with a close aimed at July 31. The bankruptcy filing covered five Sleep Number entities, all filed on June 12 with assets between $500 million and $1 billion and liabilities between $1 billion and $10 billion.

Stock Impact and Investor Outlook

SNBR shares fell from $0.66 to $0.39 USD on June 14, a 40.9% daily drop. The stock is down 95.2% year-to-date and trades at a market cap of $9.3 million. Meyka rates the stock a C with a Sell recommendation. With analyst consensus at Reduce and the stock trading near penny-stock levels, common equity holders are expected to receive nothing in the restructuring.

Final Thoughts

Sleep Number’s bankruptcy marks the end of a 39-year-old mattress brand. With $672.5 million in debt and a $415 million asset sale, common shareholders face complete loss. The stock’s near-total collapse reflects the debt-heavy capital structure that forced the filing.

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