Classic Sleep Reorganizes Under Chapter 11

January 4, 2010  by in UnCategorized   

By Home Furnishings Business in on January 5, 2010 Classic Sleep Products, Jessup, Md., has filed a Chapter 11 petition in U.S. Bankruptcy Court for the District of Maryland, seeking approval of the sale of assets of the company.

With the court's approval, a new company, Classic Brands LLC, would own the assets and is backed with an infusion of $10 million in new financing. Classic's long-time Chinese manufacturing partner will have an equity stake in the new company.

The company said there will be no disruption of service to its customers, vendors or suppliers.

Under the business plan, the current management team led by CEO Mike 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 United States," Zippelli said. "This strong infusion of capital will strengthen our current business and position the company for dynamic future growth."

Zippelli said the Chapter 11 process was a necessary step for Classic to separate  itself from its parent company, Dormia Inc., which had operated more than 30 stores until shortly after its Chapter 11 filing 18 months ago.

"We have worked closely with our Chinese supplier for many years," Zippelli said. "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. The cost differential gives us a unique strategic advantage by enabling us to include features at the under $1,500 price point at quality levels that are impossible to produce domestically."

Classic Sleep Products sells its bedding products and accessories under the Dormia, Space Age and Natural Expressions brands and uses all-natural and high-performance covers, lamb's wool, Talalay and Dunlop latex, and visco-elastic memory foam.