Mattress maker Sleep Number Corp. announced Friday that it has filed bankruptcy, with an agreement to sell the firm to one-time retail partner Sleep Country Canada Inc. after years of weak demand, mounting financial pressure and unpredictable tariffs.

Minneapolis-based Sleep Number blamed its bankruptcy, in part, on “the unpredictable shifting of trade rules imposed by the current U.S. government on top of an already vulnerable global supply chain,” according to the Friday court filing.

Even after the U.S. Supreme Court struck down some of President Donald Trump’s tariffs, “the broader trade landscape remained complex and the company continued to manage ongoing regulatory uncertainties, particularly regarding potential alternative tariff frameworks that may be imposed” on U.S. imports, Chief Financial Officer Amy O’Keefe said in the filing.

Sleep Number filed for Chapter 11 protection from creditors in order to hold an auction, at which Sleep Country would be the so-called stalking horse bidder. Its all-cash opening offer for “substantially” all of the firm’s assets is $415 million, O’Keefe said.

Because the firm tried to sell itself in the months leading up to the Chapter 11 filing, O’Keefe said Sleep Number is seeking a 26-day sale process. Any competing bids would be due July 8 and the sale would close by July 31 under the company’s proposed timeline.

Sleep Number, which operates 572 stores and is known for its customizable beds, will continue operations while seeking a quicker-than-usual court-supervised sale process, according to the filing.

The company, whose shares have plunged more than 95% the past four months, has been hurt by declining store traffic amid broader industry pressures.

In response to mounting financial woes, O’Keefe said Sleep Number restructured its real estate portfolio and launched a number of cost-cutting initiatives in recent years. The firm had reported its operating costs fell by $136 million last year, but its net loss still widened as net sales dropped 16%.

Sleep Number said in a statement that will continue to review its footprint with the aim of retaining as many retail locations as possible. It added that as much of $65 million of new borrowing has been arranged to pay for the restructuring process. Sleep Number would also refinance $195 million of older debt should the loan package be approved by the judge overseeing the bankruptcy case.

The company listed assets of between $500 million and $1 billion and liabilities of between $1 billion and $10 billion, with lenders owned about $672.5 million.

On Thursday, the Minneapolis City Council voted on major action items regarding the future of George Floyd Square.

One provides financial relief to those who live and own property near 38^th & Chicago Avenue, in the hundreds of thousands of dollars. The other rejects a proposal from the mayor, setting up yet more delays. 

The city was seeking a more than $630,000 assessment to help pay for the $15 million construction project that’s underway — but in unanimous support, the council voted to not charge home, business and property owners. 

Help may be on the way for people face special assessments near George Floyd Square

“This project has been billed for so long as something the city was doing for the community, and you can’t do something for the community and then charge them for it as a way of recommence for the murder of George Floyd,” said Councilor Soren Stevenson, who represents part of the area around George Floyd Square. 

At the meeting, the council also rejected the mayor and city staff’s recommendation on who should have exclusive development rights for the former gas station site at the intersection, now known as The Peoples’ Way.

Defying community input from a survey about what people like to see at the site, the mayor chose the Minnesota Agape Movement to handle the work.

Minneapolis mayor, city staff defy community survey, pushback growing on council

The city and Mayor Frey received sharp criticism from some council members at their meeting. 

“The city absolutely fumbled this process from start to finish,” Robin Wonsley said. 

Council member Jason Chavez, who also represents parts of George Floyd Square, said, “Much of the feedback that my office has received since a decision was made has been frustration and distrust in the process.”

In a statement from the Mayor’s office, they pushed back on the criticism of how he’s handled project planning, sharing specifically about the action taken Thursday:

“Voting down Agape and returning to the drawing board is the Council’s prerogative. Mayor Frey’s goal is to move forward at George Floyd Square and stop delaying. The mayor is already coordinating with Council Members Chavez and Stevenson and City staff to determine a path forward.” 

Since the city shared their pick for development rights at the Peoples’ Way, the mayor’s office has declined multiple interview requests, as we try to learn his reasoning.

We also had other questions about what seems like a contradiction in how he’s felt about community being involved in this process so far.

For example, following a city council override of his veto as they pushed for a 38th & Chicago plan that community surveying found was not wanted in February 2025, the mayor lashed out at council members. 

“Today’s short-sighted decision by the council has ignored community wishes and is a colossal waste of both time and money,” Mayor Frey said that February day last year.

A Minneapolis man accused of stealing $4 million from the Federal Child Nutrition Program during the Covid-19 pandemic surrendered to the FBI on Thursday, federal officials announced.

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Said Abdullahi Ereg was indicted on June 24, 2024, on charges including conspiracy to commit wire fraud, wire fraud and money laundering.

Ereg is accused of obtaining, misappropriating and laundering millions of dollars meant to feed children in need, officials said in a statement.

“Today’s arrest is historic,” FBI Director Kash Patel said in a different statement.

It was not immediately clear whether Ereg has a lawyer.

Ereg was added to the Justice Department’s “Most Wanted Fraudster” list last week and is the first person to be arrested, Patel said.

Federal officials established the list to “bring to justice the alleged worst of the worst who took advantage of American taxpayers and stole public funds, and let them know that the days of Washington, D.C. turning a blind eye to fraud are over,” Patel said in the statement.

Officials said Ereg ran a grocery store and deli in Minneapolis that was sponsored by the nonprofit organization Feeding Our Future. The organization, founded in Minnesota in 2016, has recently been at the center of a federal investigation into what federal officials have called “the single largest COVID-19 fraud scheme in the country.”

Aimee Block, former leader of Feeding Our Future, was convicted last month in a $250 million fraud case that helped ignite an immigration crackdown by the Trump administration.

The group was part of a large fraud network that included partner organizations, fake distribution sites, kickbacks and false lists of children supposedly being fed, prosecutors said in Block’s indictment.

Ereg is alleged to have participated in the scheme during a one-year period starting in 2020. He is accused of submitting false reimbursement claims and receiving more than $4.2 million in federal funds.

A federal arrest warrant was issued after Ereg was charged, but he was living overseas, and his whereabouts were not known.

He surrendered to FBI agents at Minneapolis-St. Paul International Airport.

“This case sends a clear message: being outside the United States does not place you beyond the reach of HSI and our law enforcement partners,” said Michael McCarthy, the Homeland Security Investigations special agent in charge in Minneapolis. “Our commitment is unwavering: those who exploit programs intended to support children and families will be identified, investigated, and brought to justice here in Minnesota.”

Ereg’s wife, who worked with him, pleaded guilty last year to one count of money laundering. She is scheduled to be sentenced next week.