Delaware Hosts First Billion-Dollar Chapter 11 Case Since November 2025; Sleep Number and Simply Interior Homes Lead Busy Consumer Week

The bedding sector was hit this week with two bankruptcies from Sleep Number and Simply Interior Homes LLC (a home decor business including bedding), with Sleep Number noting that “multiple mattress retailers have experienced distress” over the past decade in a “historic industry recession.” Sleep Number and Simply Interior are both looking to run sale processes, with Sleep Number having secured a stalking horse bid from Sleep Country Canada and Simply Interior entering chapter 11 without a current stalking horse.

SiFi Networks America LLC, an open access developer of fiber-to-the premises networks, is also running a sale process, with prepetition secured lender/putative DIP lender ArcLink as stalking horse. The Palm Valley School, a Rancho Mirage, Calif.-based pre-K through 12th grade private school also filed to run a sale, and says its campus is valued at $14 million to $24.8 million and received an offer to purchase the campus for $11.5 million just before the filing. Palm Valley filed in the Central District of California this week due to low enrollment and “reputational damage caused by a personnel incident.”

Another consumer discretionary sector filing came from Armadillo Distribution Enterprises Inc., manufacturer and distributor of guitars, basses, and drum products, amid family drama over corporate governance when the founder’s son took over after his death. Systematic Audio LLC, provider of car audio solutions, also filed.

GoHealth Inc., a health insurance marketplace and Medicare-focused digital health company, was the only healthcare filing and prepack of the week.

With the first half of the year coming to close, GoHealth’s filing marks the first billion-dollar chapter 11 hosted in Delaware. In 2024, in line with historical averages, 16 chapter 11s with more than $1 billion in liabilities filed in Delaware. This pace continued in 2025 but only through the first half, during which seven billion-dollar cases were filed in Delaware and after which there was only one, for a year end total of eight.

Venue dynamics have been evolving recently, with 2024 seeing a larger portion of cases filed outside the usual suspects with respect to bankruptcy court districts, and districts like Texas Northern and New Jersey increasing their presence. Meanwhile, the Southern District of New York has become increasingly elusive for large bankruptcy filings outside of the aviation and finance industries.

Electricity producer Danskammer HoldCo LLC also filed in Delaware. Graboyes LLC, a commercial and architectural custom glass and metal construction and window installation firm, filed to restructure, facing an up to 20% spike in the cost of materials and a dispute with merchant cash advance lenders.

The week also included an involuntary filing against water technology start-up HydroTech Inc. One of the petitioning creditors is seeking removal of a state court lawsuit to the bankruptcy court involving termination of the company’s former CEO and a corporate governance dispute. The involuntary was filed to protect HydroTech’s intellectual property, according to the notice of removal.

Similar to the softening of billion-dollar chapter 11 filings relative to the last few years, as shown in the court districts graph two paragraphs up, filings in the $100 million to $500 million range, are also down slightly.
 

However, smaller cases continue to surge. Over the Jan. 1 – June 12 stretch, 2026 has recorded more chapter 11s above the $10 million liability threshold than any year in the First Day Database, as shown in the line graph below.
 

In addition, the $500 million to $1 billion liability range is significantly elevated over prior recent years, with help from this week’s filing from Sleep Number.
 

Sleep Number filed early this morning in the Southern District of New York with a stalking horse agreement with Sleep Country Canada that carries a cash purchase price of $415 million, plus the assumption of certain liabilities but subject to certain potential purchase price adjustments. The sale to Sleep Country is designed to address a balance sheet weighed down by approximately $672.5 million in prepetition funded debt, which includes a $475 million revolving facility and nearly $200 million in term loans. The debtors are pushing for a highly expedited 26-day post-petition marketing period, proposing a July 8 bid deadline, a July 13 auction, and a targeted closing date of July 31.

The Sleep Number debtors are requesting approval of a $260 million DIP financing facility with $65 million in new money tied to a $195 million rollup of prepetition secured obligations on a 3-to-1 basis.

Sleep Number’s chapter 11 filing was precipitated by a historic industry recession driven by a consumer shift toward e-commerce, diminishing profit margins, supply chain vulnerabilities and the unpredictable impact of U.S. tariffs imposed under the International Emergency Economic Powers Act (IEEPA). As macroeconomic headwinds strained the company’s bottom line, Sleep Number faced acute liquidity and vendor distress prepetition, evidenced by BMO Harris delivering notice in April 2026 to terminate the debtors’ corporate purchase card program. To generate emergency liquidity and extend its operating runway ahead of the bankruptcy, the company sold its rights to IEEPA tariff refunds to a third-party buyer on May 13.

Health insurance marketplace GoHealth Inc. filed a prepackaged chapter 11 on June 7 to implement a change-of-control transaction whereby the first lien lenders would get 100% of reorganized equity (subject to dilution by the management incentive plan) plus shares of a $588.3 million third-out term loan. The debtors filed with 100% of prepetition lenders supporting the plan, and debtors’ counsel said at the first day hearing that 75% of equity supports the plan. The debtors are funding the case with the use of cash collateral.

GoHealth’s 2024 shift to an agency business model and away from a non-agency model contributed to the chapter 11 filing. When GoHealth shifted toward the agency model in response to market and carrier pressures, it was cash flow negative in the first year and required upfront investment in hiring and retaining agents, creating a liquidity squeeze that prompted the debtors to begin negotiating with lenders.

Judge Thomas M. Horan approved the GoHealth debtors’ first day relief at Tuesday’s first day hearing, setting a combined plan confirmation and disclosure statement approval hearing for July 16.

Simply Interior Homes LLC, a Rock Hill, S.C.-based designer, sourcer and supplier of fashion bedding, window treatments, bath products, decorative textiles and related home furnishings for “major retailers,” filed on June 8 in Delaware. The company is looking to conduct a liquidation of inventory, outstanding trade accounts receivable and other working capital assets and then sell the business and other assets as a going concern or otherwise. The debtors have not identified a stalking horse bidder for their assets as of the petition date. The debtors’ prepetition secured lenders are funding the cases with $15 million in DIP loans consisting of $5 million in new-money loans and a rollup of up to $10 million in prepetition obligations.

The Simply Interior debtors were formed in 2025 as a “carve-out” of the soft goods business divisions of Keeco LLC, a Centre Lane Partners portfolio company. Keeco rebranded as “Live Comfortably” following the carve-out. The debtors cite a series of “compounding and interconnected challenges” as contributing to the chapter 11 filings, including an undercapitalized opening balance sheet following the carve-out, the inheritance of diminished customer and supplier relationships from the prior Keeco operations, and a reduction in certain major customer programs. Notably, the debtors accuse Live Comfortably and sponsor Centre Lane Partners of inappropriately withholding and setting off millions in customer remittances belonging to the debtors following the allegedly undercapitalized carve-out transaction.

Judge Craig T. Goldblatt approved Simply Interior Homes’ first day relief at Tuesday’s hearing. Debtors’ counsel said the debtors intend to investigate potential claims related to the transaction carveout transaction but have not “reached any conclusion.” Counsel for Centre Lane said the first day declaration painted his client in a “very unfair light.”

SiFi Networks America LLC, a Wilmington, Del.-based open access developer, operator and wholesaler of fiber-to-the-premises networks in California and the Midwest, filed on June 5 in Delaware to run a sale process with prepetition secured lender/putative DIP lender ArcLink as stalking horse. The company filed after parent SiFi Networks America Ltd., or SNA Ltd., discontinued funding, took steps to sell substantially all of its own assets and commenced an insolvency proceeding in the United Kingdom.

In April 2026, SNA Ltd. was acquired by PATRIZIA, a German infrastructure investment manager. ArcLink is an affiliate of PATRIZIA. In addition to serving as stalking horse, ArcLink has also agreed to provide a $3.13 million new-money DIP loan, plus a full rollup of the prepetition note. The debtor is pushing for a highly expedited sale timeline, stressing that any delays could leave municipalities with abandoned, partially constructed fiber networks in their public rights of way.

Armadillo Distribution Enterprises Inc., a Tampa, Fla.-based manufacturer and distributor of guitars, basses, and drum products filed on June 9 in the Middle District of Florida. The debtors look to reorganize amid litigation with secured lender Valley National Bank and disputes over ownership and management with the company’s founder’s son, who allegedly committed fraud, and associated costs.

Armadillo’s CEO Pamela Keris-Rubinson traces the company’s problems to the death of her husband and founder Elliott Rubinson, when their then-25 year old son Evan Rubinson took over as President and CEO, after which Armadillo’s financial performance “steadily declined.” In 2022, Pamela Keris-Rubinson, as trustee of a trust that held a 100% interest in Armadillo, fired Evan and assumed operational control, after which through forensic accounts allegedly discovered that Evan and the company’s former CFO Ross Sacco “grossly mismanaged” and “looted” the company.

The debtors assert that they have “substantial going-concern value” and a backlog of more than $2.5 million in customer orders. The company’s branded products include Dean Guitars, Luna Guitars, ddrum, Dean USA Custom Shop and Stromberg Guitars. Concordia’s “most significant” assets are intellectual property rights associated with Dean Guitars, Luna and ddrum that are the foundation of Armadillo’s business and a “substantial” portion of the debtors’ enterprise value.

Philadelphia area commercial and architectural custom glass and metal construction and window installation firm Graboyes LLC filed on June 5 to “explore options to restructure its business.” The debtor says it believes “it will have sufficient cash flow from operations to remain current on its ordinary course obligations.” The debtor seeks to fund the case with the use of cash collateral.

Filing alerts and case summaries from this review period are recapped below, all of which can also be found on the First Day website: