Sleep Number Files Chapter 11, Agrees to Sell to Sleep Country Canada for Up to $260 Million in DIP Financing

What Happened

Sleep Number Corporation, the Minneapolis-based maker of smart adjustable mattresses, announced on June 12, 2026, that it has entered an asset purchase agreement with Sleep Country Canada and initiated a voluntary Chapter 11 bankruptcy sale process to facilitate the deal. The announcement came via a Business Wire press release published this morning.

The company is seeking up to $260 million in debtor-in-possession (DIP) financing to keep operations running through the court-supervised process, according to Intellectia.AI's coverage citing Newsfilter.

Sleep Number CEO Linda Findley did not soften the picture. "Our capital structure remains unsustainable," she said in the announcement. The company has been running a turnaround effort, but the debt load outran the recovery.

The Deal Structure

This is an asset purchase, not a traditional merger. Sleep Country Canada is buying Sleep Number's assets through a bankruptcy court process. In a Chapter 11 asset sale, creditors get paid before shareholders. With SNBR shares trading at $0.743 today, equity holders are not in a favorable position.

UBS analyst Dan Silverstein had been flagging the deterioration for months. He cut his price target from $10 to $4 in March 2026, then cut again from $4 to $2 in May 2026, maintaining a Neutral rating both times, according to Intellectia.AI. Even the $2 target is now nearly three times the current share price.

Two Wall Street analysts currently cover the stock. Both rate it a Hold. Average price target: $5.50. Current price: $0.743. The gap between these figures reflects where analysts see residual equity value.

What Stays Open, What Changes

Sleep Number says customers should not expect disruption. Per the company's announcement, stores remain open, online orders are being accepted, the 100-night trial and warranty services remain in effect, and the company plans to keep assembling its products in the United States after the deal closes.

Sleep Country Canada CEO Stewart Schaefer said Sleep Number's products are differentiated and that the combined company will expand Sleep Number's line into Canada and potentially other international markets.

The company also says it plans to retain as many profitable retail locations as possible during the process, though the bankruptcy court will ultimately supervise which leases and assets are included in the sale.

How It Got Here

Sleep Number built its brand on the adjustable, sensor-equipped "smart bed" concept, a genuinely differentiated product in an otherwise commoditized mattress market. But differentiated products are expensive to build and market, and the company carried a debt load that left no room for revenue softness.

The housing slowdown, weakened consumer spending on big-ticket discretionary items, and competition from direct-to-consumer mattress brands all pressed the company's margins. UBS's two consecutive price target cuts in the first half of 2026 tracked that deterioration in real time.

The Strongest Case for Skepticism

Some observers will reasonably ask whether Sleep Country Canada is getting a sweetheart deal at the expense of Sleep Number's creditors and employees. In a court-supervised Chapter 11 sale, competing bids are supposed to be allowed, and a bankruptcy judge must approve the process as fair. But asset sales conducted through bankruptcy can move quickly, and the stalking-horse bidder, in this case Sleep Country Canada, has structural advantages: they helped design the deal and set the floor price. Whether other bidders will emerge and whether the DIP financing terms are favorable to existing creditors are questions that will play out in bankruptcy court, not in court filings.

No creditor objection has been reported, and no competing bid has been announced as of June 12, 2026.

What Comes Next

The bankruptcy court process will determine the timeline for the sale's close. Sleep Number has not announced a specific hearing date in the sources available. The open question with the most consequence: whether any competing bidders emerge before the court sets a bid deadline, which would either increase the sale price for creditors or confirm that Sleep Country Canada's offer is the market's best assessment of what these assets are worth.