Quick Answer: Sleep Number is preparing for a possible bankruptcy filing to deal with roughly $605 million in debt and a 16% drop in sales — and if you own one of its smart beds, the two things most at risk are your long-term warranty and the app that runs the bed’s adjustable features. Warranties from a company in Chapter 11 are usually treated as unsecured claims worth pennies on the dollar, and a “smart” bed that depends on a company’s servers can lose features if those servers go dark. Here is what to do now, and the bigger lesson hiding inside this story.
Expert Context: I filed bankruptcy myself in 1990 after my real estate business collapsed, and I’ve spent the 30 years since helping people understand that bankruptcy is a financial tool, not a character verdict. So when I watch a company like Sleep Number quietly line up bankruptcy financing as a smart, board-approved move, I notice something most coverage skips: corporations use this exact tool strategically and without shame — while regular people are taught to feel like failures for having the same legal right.
Sleep Number — the company that sells those adjustable, app-controlled “smart beds” — is laying the groundwork for a potential bankruptcy filing as it struggles under a heavy debt load and falling sales. The news sent its stock down roughly 60% in a single stretch. The company hasn’t filed yet, but it has approached lenders about new financing that could be structured as a bankruptcy loan, and it warned investors in its SEC filings that it expects to break the financial covenants on its credit agreement at some point in 2026.
If you’re a customer, your first reaction is probably not about covenants and revolvers. It’s: I paid thousands of dollars for this bed and it came with a 15- or 25-year warranty — is that warranty about to become worthless? And what happens to the app I need to actually adjust the thing? Those are exactly the right questions, and they deserve honest answers.
Key Terms Defined
Chapter 11 bankruptcy: A reorganization process that lets a business keep operating while it restructures or sheds debt. It is not a shutdown — it’s often a financial reset. Many household-name companies have gone through it and kept their doors open.
Executory contract: A contract where both sides still owe each other something — like a warranty (you paid, they promised future repairs). In bankruptcy, a company can ask the court to “reject” these contracts, which is why warranties are so often the first thing customers lose.
Going-concern doubt: Language in a company’s financial filings warning there’s substantial doubt it can keep operating over the next year without new financing. Sleep Number’s 2025 annual report carried this warning.
What a bankruptcy filing could mean for your warranty
This is the part that matters most to people who already own a bed. When a company files Chapter 11, it can ask the bankruptcy court to “reject” its executory contracts — and warranties are a classic example. If that happens, your remaining warranty doesn’t vanish into thin air, but it converts into an unsecured claim against the bankruptcy estate. In plain English: you get in line behind the banks and the bondholders, and unsecured claims often pay out little or nothing.
I want to be careful here, because Sleep Number has not filed and no court has rejected anything. This is about understanding the risk, not predicting doom. But if you’ve been counting on a 15- or 25-year warranty as a reason you bought an expensive bed, this is the moment to stop assuming that promise is bulletproof.
If you have a pending warranty claim: File it now, in writing, and keep copies. A claim that’s already submitted and being processed stands a better chance than one you “get around to” after a filing. Don’t wait to see what happens — waiting only helps the company, never you.
The “smart bed” problem nobody warns you about
Here’s the wrinkle that makes this different from a furniture store closing. A Sleep Number bed isn’t just a mattress — its adjustability and sleep-tracking run through the company’s SleepIQ technology and a companion app that talks to the company’s servers. The patent portfolio and that sleep-data platform are among the most valuable things the company owns, which is actually good news: assets that valuable usually get bought by someone in a sale, and the beds likely keep working.
But “likely” isn’t “guaranteed.” Any product that depends on a manufacturer’s cloud to deliver its core features carries a quiet risk: if the servers go dark and no buyer steps in to keep them running, the smart features can degrade. We’ve seen this exact movie with smart-home gadgets, connected cars, and app-controlled devices whose makers folded. It’s a reminder that “smart” sometimes means “dependent on a company staying in business.”
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Protect yourself now, while everything still works: If your bed lets you save your firmness and adjustment settings, write them down somewhere offline. Note your model and purchase details. That way, even in a worst case, you know your numbers and aren’t relying on an app to remember them for you.
The bigger lesson: bankruptcy is a tool, not a moral failing
Now the part I really want you to hear, because it’s the whole reason this corporate story belongs on a site about your money.
Watch how this is being reported. Sleep Number is “laying the groundwork.” It’s “exploring strategic alternatives.” It “approached lenders about financing.” Nobody is calling the board irresponsible. Nobody is suggesting the executives are bad people who should be ashamed. Bankruptcy is being treated as exactly what it is — a legal, rational, sometimes smart tool for dealing with debt that has outgrown the income to service it.
Now compare that to how everyday people are made to feel about the same tool. When a family considers bankruptcy after a job loss, a medical crisis, or a divorce, the language flips entirely: failure, shame, “you should have been more responsible.” That double standard isn’t an accident. As legal scholar Abigail Faust documented in her 2021 research on bankruptcy reform, members of Congress argued for years that rising consumer filings were caused by a “loss of personal responsibility” — while portraying the lenders who handed out the credit as innocent bystanders. The blame got pointed at borrowers and away from the businesses profiting on the other side.
The Claim: Bankruptcy means you failed with money and didn’t take responsibility.
The Reality: Bankruptcy is a debt-restructuring tool written into U.S. law on purpose, used routinely by major corporations as sound financial strategy. The math stopped working — that’s an arithmetic problem, not a moral one. I filed in 1990, rebuilt everything, and have spent three decades watching people recover and thrive on the other side of it.
I’m not telling you to file bankruptcy. I’m telling you to stop carrying shame about a legal right that the most sophisticated boardrooms in America use without a second thought. If a billion-dollar company can look at its debt, run the numbers, and decide bankruptcy is the responsible move — you’re allowed to look at your own situation with the same clear eyes.
Not sure where you actually stand? If the math feels impossible and you don’t know which direction makes sense, take the free Find Your Path quiz. It walks through your real situation and points you toward the options that fit — no sales pitch, no judgment, just a clearer picture.
Key Takeaways
- Sleep Number is preparing for a possible Chapter 11 filing over ~$605M in debt and a 16% sales drop — it has not filed yet.
- Warranties in bankruptcy are often “rejected” and become near-worthless unsecured claims — file any pending claim now, in writing.
- Smart beds depend on company servers; save your settings offline so you’re not relying on the app if features degrade.
- Corporations use bankruptcy as a routine financial tool. You have the same legal right — without the shame you’ve been taught to feel.
The Bottom Line
If you own a Sleep Number bed, this news is unsettling — but it’s manageable: document your warranty claim now, save your bed settings offline, and don’t panic, because nothing has been filed yet. The deeper thing I want you to take from this is bigger than a mattress. A major company just showed the whole country that looking your debt in the eye and using every legal tool available is not shameful — it’s smart. You are allowed to do the same. Your debt is math, not a measure of your worth, and there is always a way forward. If this helped you see that, send it to someone who’s lying awake tonight feeling alone in their numbers.
Frequently Asked Questions
Has Sleep Number actually filed for bankruptcy?
No. As of this writing Sleep Number has not filed for bankruptcy. It is preparing for the possibility — approaching lenders about financing that could be structured as a bankruptcy loan and warning that it expects to violate its credit covenants in 2026. Preparing for a filing and filing are two different things, and the company may still avoid it.
Will my Sleep Number warranty still be valid if the company files Chapter 11?
Maybe not. In bankruptcy, a company can ask the court to reject warranty obligations as executory contracts, which would turn your remaining warranty into an unsecured claim — typically paid pennies on the dollar, if anything. If you have a warranty issue right now, submit the claim in writing immediately and keep copies. A claim already in process is in a stronger position than one filed after a bankruptcy.
Will my smart bed stop working if Sleep Number goes under?
The core mattress will still function, but the “smart” features — adjustability through the app and SleepIQ tracking — depend on the company’s servers and software. If a buyer acquires the business (the patents and sleep-data platform are valuable, so this is likely), those features probably keep running. If servers were ever shut down with no buyer, app-dependent features could degrade. Save your firmness and adjustment settings somewhere offline as a precaution.
Should I stop making payments if I financed my bed?
No — keep paying as agreed unless your own finances make that impossible. The company’s bankruptcy doesn’t erase a loan you took out to buy the bed, especially if that financing came through a separate lender. If your own debt has become unmanageable, that’s a different conversation worth having deliberately — not a reason to default on one bill in reaction to a news headline.
If a big company isn’t ashamed to use bankruptcy, why should I be?
You shouldn’t be. That’s the entire point. Bankruptcy is a legal tool Congress built into the law on purpose, and corporations use it as routine financial strategy. When the math stops working, restructuring debt is an arithmetic decision, not a moral one. I filed in 1990 and rebuilt my life — the shame attached to personal bankruptcy is a story we’ve been told, not a financial fact.
Dealing With Debt? Understanding your options is the first step. See how all your debt relief options compare — including ones most sites won’t tell you about. The Find Your Path quiz gives a recommendation based on your actual numbers, and the Scam-O-Meter checks any company’s complaint history before you sign. Federal Reserve research shows bankruptcy filers recover faster than those who don’t file.
