Mattress maker Sleep Number Corp. entered a court‑supervised Chapter 11 sale to Canadian retailer Sleep Country. The filing in the Southern District of New York lists assets between $500 million and $1 billion against liabilities that range from $1 billion to $10 billion. The merger aims to keep the brand alive after years of weak demand. Analysts see the move as a last‑ditch effort to avoid liquidation.

Sleep Number seeks up to $260 million in debtor‑in‑possession financing, including $65 million of new capital, to fund operations during the restructuring. The cash will cover payroll, supplier invoices and other obligations while the company trims its footprint. Last year it cut adjusted expenses by $136 million, yet sales fell 16%, driving the stock down roughly 95% in four months. The financing package remains subject to court approval.

The deal gives Sleep Country a foothold in the U.S. market and could preserve hundreds of retail locations, but creditors face uncertainty given the wide liability range. Investors will watch how the combined entity restructures pricing and supply chains amid tariff pressures and shifting consumer habits. The bankruptcy sale marks a valuation decline for a mattress brand in history. Shareholders are unlikely to recover significant value.