Group of Serta Simmons Lenders Wins Substantial Money Damages Judgment

Paul, Weiss won a significant victory on behalf of an ad hoc group of Serta Simmons Bedding lenders excluded from a 2020 debt restructuring deal, when the U.S. Bankruptcy Court for the Southern District of Texas ruled in our clients’ favor, awarding about $260 million in damages, subject to certain adjustments, plus over $100 million in prejudgment interest from lenders who participated in a so-called uptier transaction.

For the past six years, Paul, Weiss has represented the lender group in connection with Serta’s chapter 11 bankruptcy, including preserving litigation claims related to the pre-bankruptcy transaction, which had allowed the participating lenders to exchange and “uptier” their old debt for new debt with higher repayment priority, while deprioritizing our client’s loans.

After the bankruptcy court upheld the deal and confirmed Serta Simmons’ reorganization plan, Paul, Weiss appealed to the Fifth Circuit. In December 2024, the Fifth Circuit reversed, holding that the transaction was not a permissible “open market purchase,” and was thus invalid. Following remand, the litigation culminated in a trial in March 2026.

In his ruling, U.S. Bankruptcy Judge Christopher Lopez found that the uptier transaction was considered a payment under the terms of Serta’s credit agreement and that our clients should have shared in the benefits of the deal.

The Paul, Weiss team is led by restructuring and debt capital solutions partners Brian Hermann and Michael Colarossi, and includes litigation partners Gregory Laufer and William Clareman, of counsel Lewis Clayton and counsel Robert Kravitz and Robert J. O’Loughlin.