We advised Sleep Number on the going concern sale under section 363 of the Bankruptcy Code

Davis Polk advised Sleep Number Corporation and its affiliates on the sale of substantially all of their assets to SNBR, Inc., an affiliate of Sleep Country Canada, Inc. Immediately prior to commencing the chapter 11 cases on June 12, 2026, Sleep Number entered into an asset purchase agreement with Sleep Country Canada, which agreed to serve as the stalking horse bidder in a court-supervised sale process pursuant to section 363 of the Bankruptcy Code.

On July 13, 2026, following a competitive auction involving multiple bidders, Sleep Country Canada was selected as the successful bidder. The consideration to be received by Sleep Number under the final transaction increased by approximately $287 million from what was contemplated under the initial agreement, which includes an increase in the cash purchase price from $415 million to $529.5 million. The final transaction provides for a total adjusted consideration of $701.8 million.

On July 20, 2026, Judge Kyu Y. (Mike) Paek of the U.S. Bankruptcy Court for the Southern District of New York, who is presiding over Sleep Number’s chapter 11 cases, approved the sale in its entirety, and the sale closed on July 31, 2026. The sale was a resounding success, continuing the business as a going concern, preserving thousands of jobs and operations at hundreds of stores across the country while maximizing recoveries for Sleep Number’s creditors.

Sleep Number, founded in 1987 and headquartered in Minneapolis, Minnesota, has been a leader in personalized sleep wellness, developing and selling sleep wellness solutions, including smart beds and mattresses equipped with digital sleep tracking applications.

Headquartered in Toronto, Ontario, Sleep Country Canada is recognized as the largest specialty mattress retailer in Canada.

The Davis Polk restructuring team included partners Brian M. Resnick and Angela M. Libby, counsel Stephen D. Piraino and Richard J. Steinberg and associates Sihui (Sophy) Ma, Motty (Mordechai) Rivkin, Jacob Goldberger, Eva (Luying) Wang, Katharine O’Neill, Tashanique (Tasha) Brown and Erin Azie. The M&A team included partners Brian Wolfe and Lee Parnes and associate Leon Ren. The finance team included partner Robert F. Smith and counsel Louis Quagliato. Partner Elliot Moskowitz provided litigation advice. Partner Veronica M. Wissel and counsel Justin Alexander Kasprisin provided executive compensation advice. Partner Frank Azzopardi and associate Lachlan J. Forrester provided intellectual property advice. Partner Corey M. Goodman and counsel Leslie J. Altus provided tax advice. Partner Arthur J. Burke and counsel Meytal McCoy and Nathan Kiratzis provided regulatory and antitrust advice. Members of the Davis Polk team are based in the New York and Washington DC offices.

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