World's leading Home furnishing maker Foamex International Inc announced that the Company and certain of its subsidiaries have filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
The Company, which has been in active negotiations with its key creditors, also announced an agreement in principle with certain members of an ad hoc committee that collectively hold a majority of the Company's Senior Secured Notes on the key terms of a proposed reorganization plan. The agreement in principle would provide for a significant deleveraging of the Company's balance sheet and result in improvements to the Company's capital structure and profitability. Today's filings do not affect the Company's foreign operations.
In conjunction with its filing, the Company is seeking Bankruptcy Court approval of up to $240 million in revolving credit debtor-in-possession (DIP) financing agented by Bank of America, N.A. The proposed DIP financing, combined with the Company's cash flow from operations, is expected to provide the Company with sufficient liquidity to meet its post-petition operating expenses in the ordinary course of its business.
With such funding sources the Company will be in a position to pay certain pre-petition obligations, including those owing to certain critical suppliers and employees, subject to Bankruptcy Court approval. Foamex has also received a commitment from Bank of America for exit financing upon the Company's emergence from chapter 11.