An economic downturn in the furniture retail sector has resulted in major home furnishing companies closing stores and filing for Chapter 11 bankruptcy protection to reorganize their businesses.
The furniture industry has cited declining sales, as a result of a multi-year housing slump, and rising product and labor costs driven by inflation and higher tariffs, for a reduction in furniture company sales and profits.
The furniture industry’s mattress subsector has not been immune to economic problems as retailers have needed to file for bankruptcy to restructure their severe debt obligations.
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American Mattress fights creditors
Bankrupt mattress retail chain American Mattress is battling its unsecured creditors, who filed a motion in January to convert the retailer’s Chapter 11 reorganization to a Chapter 7 liquidation.
The Official Committee of Unsecured Creditors alleged in their Jan. 28 conversion motion that the debtor had not made meaningful progress toward reorganization, had not filed a reorganization plan, and had operated without credible financial projections, a business plan or independent financial oversight.
US Trustee seeks conversion or dismissal
The U.S. Trustee also filed a motion on Jan. 30 to either a convert the bankruptcy case to Chapter 7 or dismiss the case, since the debtor had not paid rent for leased stores, had not paid professional fees and had recorded $1.26 million in operating losses since November.
The Elk Grove Village, Ill.-based furniture chain, which operates 45 locations in four states, including Illinois, Indiana, Michigan, and Florida, however, countered those Chapter 7 conversion filings with an objection in the U.S. Bankruptcy Court for the District of Delaware on March 3, 2026, claiming that a buyer has offered to purchase its assets and pay all cure costs, Furniture Today reported.
American Mattress said in its objection that if its case was converted or dismissed, only the secured lender would likely get paid while unsecured creditors would receive nothing.
A hearing on the matters was scheduled for March 5, but no rulings on the motions had been posted at last check, Furniture Today said.
American Mattress prepares sale motion
In its objection, American Mattress said it had cashflow problems since it filed for bankruptcy, which it said it was addressing, and it was developing an exit strategy from bankruptcy. It also plans to file an asset sale motion, the report said.
The debtor’s parent, AFM Mattress Company LLC, filed its Chapter 11 petition on July 6, 2025, listing $1 million to $10 million in assets and liabilities and seeking to reorganize its business and restructure debt.
AFM Mattress Company had not filed a restructuring plan or named new funding source at the time. The debtor has approximately 100-199 creditors, and the petition indicated that funds will be available for distribution to unsecured creditors.
Debtor closes store locations
The debtor has reportedly been closing locations with notices posted on front doors stating, “Store Temporarily Closed.” The notices provide a phone number to call for questions and to inquire about orders.
American Mattress, which was established in 1988, features top mattress brands, including Serta, Beautyrest, Sealy, Tempur-Pedic, Purple, and Stearns & Foster.
More bankruptcies:
- Troubled automobile maker files Chapter 7 bankruptcy liquidation
- Major gambling destination files for Chapter 11 bankruptcy
- Major department store brand liquidates in Chapter 11 bankruptcy
The mattress retailer’s financial distress matches distress in the furniture business nationwide, as sales declined 0.82% for 2025, compared to 2024 unadjusted, according to the CNBC/National Retail Federation Retail Monitor.
Sales decline continues in 2026
For January 2026, furniture and home furnishings sales declined 0.31% month over month seasonally, the report said. February results have not been released yet.
“Furniture, of course, is many times a discretionary and deferrable expense, so weakness in the overall economy or declines in consumer confidence, like we’ve seen the last few months, can impact consumers’ willingness to spend,” Mark Laferriere, an assurance partner at Smith Leonard, told Homes.com in November 2025.
“Furniture purchases are also tied to the overall housing market, which has been sluggish, but could be primed for a resurgence with higher inventory and the ongoing reductions in interest rates,” Laferriere added, as TheStreet’s Daniel Kline reported.
Related: Award-winning beer brand shuts down after Chapter 7 bankruptcy filing
