Sleep Number Corporation - Chapter 11 Plan Terms

Plan Terms

Overview

• Sleep Number Corporation and its debtor affiliates filed a revised joint Chapter 11 plan of liquidation on Oct. 15, 2026. The court approved the sale of all or substantially all of the debtors' assets to SNBR Inc. The plan gives what remains after administrative, priority and wind-down costs to the prepetition lenders and limits general unsecured creditors to a $3.5 million cash trust.
• The revised plan replaces the version filed Sept. 4, 2026 [ECF No. 616], and a blackline accompanies it. Its main changes narrow the release and exculpation provisions. The debtors reserve the right to make further changes.
• The prepetition lenders' claims are allowed at $477.5 million, less any amounts paid under the paydown order [ECF No. 671] before the effective date.
  • The lenders keep their prepetition and adequate protection liens until the wind-down debtors dissolve.
  • They take a pro rata share of all distributable assets. That includes proceeds of the retained causes of action and any cash left in the wind-down reserves.
• General unsecured creditors share the $3.5 million GUC trust, net of its costs, under a trustee the committee selects. The plan makes the trust the sole consideration for the committee's release of all challenge rights under the DIP orders, and the challenge deadline ends irrevocably on the effective date.
• Intercompany claims, section 510(b) claims, equity in Sleep Number Corporation and intercompany interests are cancelled with no distribution.
• Rudy Morando will serve as plan administrator and as sole director and officer of the wind-down debtors.
• The debtors and the committee jointly urge holders entitled to vote to accept the plan. The committee and the administrative agent under the prepetition credit agreement hold reasonable consent rights over plan modifications, the plan supplement and waiver of effective-date conditions.

Case Background

• The debtors filed Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York on June 12, 2026. The U.S. Trustee appointed the official committee of unsecured creditors on June 23, 2026 [ECF No. 110].
• Sleep Number Corporation is the borrower under the prepetition credit facility. The plan identifies that facility as the Fourteenth Amendment to Amended and Restated Credit and Security Agreement, dated as of Feb. 14, 2018, among the borrower, the guarantors, the lenders and the administrative agent.
• The plan puts petition-date principal at $475 million on the revolving loans and $177.5 million on the term loans issued Dec. 3, 2021 under the credit agreement's sixth amendment. Those two balances total $652.5 million, which exceeds the $477.5 million aggregate at which the plan allows the lenders' claims.
• The paydown order authorizes the debtors to pay certain amounts outstanding under the prepetition loan documents. Any such payments made before the effective date reduce the lenders' allowed claim.
• The debtors financed the case with a $260 million postpetition, superpriority, senior secured, priming DIP facility. It was approved by an interim order entered June 15, 2026 [ECF No. 74], a second interim order [ECF No. 226] and a final order [ECF No. 429].
  • Those orders granted adequate protection to the prepetition secured parties.
  • They contain the debtors' stipulations and releases (paragraph F) and the committee's challenge rights (paragraph 12), which the plan now resolves.
• The amended sale order [ECF No. 470] approved the sale of all or substantially all of the debtors' assets to SNBR Inc. free and clear of liens, claims, interests and encumbrances. The sale was made under an amended and restated asset purchase agreement dated as of July 18, 2026. The debtors and SNBR Inc. and its subsidiaries are also parties to a transition services agreement dated as of July 31, 2026.
• On the effective date, the sale documents (the APA, the sale order and the transition services agreement) are deemed assumed by and vest in the wind-down debtors. The plan provides that this assumption is not an assignment under Section 3.12 of the transition services agreement. The wind-down debtors or the plan administrator, and the GUC trustee, step into the debtors' place under those documents solely to access books, records and general unsecured claims materials transferred to the purchaser.
• Administrative, priority tax, other priority and other secured claims that are assumed liabilities under the APA are not treated as plan claims. They are not paid from the plan administrator reserve and are not obligations of the debtors or the wind-down debtors.

Classification and Treatment of Claims and Interests

• Classes 3 and 4 vote; Classes 1 and 2 are unimpaired and receive payment in full in cash or, at the debtors' option, other treatment consistent with section 1129; and Classes 5 through 8 are cancelled with no distribution. The plan operates as a separate plan for each debtor without substantive consolidation, and no holder may receive more than its allowed claim.
• Class 1, other secured claims (unimpaired, deemed to accept): at the debtors' option, either payment in full in cash or other treatment consistent with section 1129, including the indubitable equivalent of the claim. Cash payment is due on the later of the effective date and 30 business days after the claim is allowed.
• Class 2, other priority claims (unimpaired, deemed to accept): at the option of the applicable debtor or wind-down debtor, payment in full in cash on the applicable distribution date, or other treatment consistent with section 1129(a)(9). A holder that does not object to confirmation is deemed to consent to treatment different from section 1129(a)(9).
• Class 3, prepetition loan claims (impaired, entitled to vote): allowed in the aggregate at $477.5 million, less amounts paid to holders under the paydown order before the effective date. Each holder keeps its prepetition liens and adequate protection liens and receives its pro rata share of distributable assets.
  • The class covers both the revolving loan claims and the 2021 term loan claims, including any unsecured deficiency. The plan expressly keeps deficiency claims out of Class 4 and the GUC trust.
  • Distributable assets are all of the debtors' or wind-down debtors' assets, including cash, at any time, net of the funding of the plan administrator reserve and excluding the GUC trust's cash.
  • Distributable assets include proceeds of the retained causes of action. Anything left in the plan administrator reserve or the wind-down account at dissolution also goes to Class 3.
  • Distributions are made to, or at the direction of, the administrative agent under the loan documents, subject to its charging lien.
• Class 4, general unsecured claims (impaired, entitled to vote): a pro rata share of distributions of the GUC trust's net assets. Net assets means $3.5 million in cash funded from the estates, less the trust's fees and expenses, which include all costs of reconciling and objecting to general unsecured claims. Lender deficiency claims are excluded from the class.
• Class 5, prepetition intercompany claims (impaired, presumed to reject): cancelled, released and extinguished on the effective date with no distribution.
• Class 6, section 510(b) claims (impaired, presumed to reject): cancelled, released and extinguished with no distribution.
• Class 7, existing interests in Sleep Number Corporation (impaired, presumed to reject): cancelled, released and extinguished with no distribution.
• Class 8, intercompany interests (impaired, presumed to reject): cancelled, released and extinguished with no distribution.

Administrative, Priority Tax and Professional Fee Claims

• Administrative claims are paid in full in cash on the following schedule:
  • on the effective date, or when due, if allowed by then;
  • no later than 30 days after the allowing order becomes final, if allowed later; or
  • in the ordinary course, for postpetition operating liabilities.
• A holder that does not object to this treatment before the plan objection deadline is deemed to consent under section 1129(a)(9) to payment after the effective date.
• Requests for payment of administrative claims other than professional fee claims are due 30 days after the effective date. They must be served on the claims agent, counsel to the debtors and wind-down debtors, counsel to the administrative agent and the plan administrator, and untimely claims are barred.
  • A timely request that draws no objection by the claims objection deadline is deemed allowed in the amount requested.
  • No request is needed for claims already allowed, for claims the debtors or plan administrator agree in writing need not be filed, or for U.S. Trustee fees.
• The administrative agent's accrued and unpaid fees, expenses, disbursements, contribution and indemnification are paid on the effective date to the extent payable under the DIP orders, whether incurred before or after the petition date. They are allowed administrative claims, and the administrative agent, the lenders and their professionals do not need to file fee applications or proofs of claim.
• Allowed priority tax claims are paid in full in cash on the applicable distribution date. A holder that does not object to confirmation is deemed to consent under section 1129(a)(9) to payment after the effective date.
• Professional fee claims, which include success fees, are paid in full in cash from a professional fee escrow account. The debtors fund the escrow before the effective date with cash from the plan administrator reserve.
  • Each professional must deliver its estimate of accrued unpaid fees and expected post-effective-date fees five business days before the anticipated effective date. The debtors may estimate in good faith for any professional that does not, and the aggregate sets the escrow amount.
  • The escrow is held in trust solely for professionals, is not estate property and is free of liens. It may be used only for professional fee claims until those are paid in full.
• Any professional fee shortfall is an allowed administrative claim that the plan administrator pays from the wind-down account; the wind-down debtors' obligation is not limited to the escrow balance. Excess escrow funds revert to the wind-down account only after all allowed professional fee claims are paid in full and after the prepetition loan claims are satisfied.
• Final fee applications are due 45 calendar days after the effective date. Objections are due at 4:00 p.m. on the 20th calendar day after each application is filed.
• From the confirmation date, the retention and compensation requirements of sections 327 through 331 and the ordinary course professionals order end.
  • Professionals send summary invoices, without time entries but with hours billed, to the debtors, the wind-down debtors, the administrative agent and the plan administrator.
  • Invoices are paid within 10 days unless someone objects in writing. Undisputed portions are paid promptly, and either side may take a dispute to the court.
• The debtors pay U.S. Trustee quarterly fees through the effective date. After that, the wind-down debtors or any disbursing entity pay them until each case is closed, dismissed or converted to Chapter 7.

Committee Challenge Release and GUC Trust

• The GUC trust receives $3.5 million in cash from the estates on the effective date, free and clear of claims and liens. No party can be required to contribute anything more, and the debtors and wind-down debtors keep no interest in those funds.
• The trust is the consideration for the committee's challenge release. On the effective date, the challenge deadline under the DIP orders irrevocably terminates and the committee dissolves. The plan treats those events as final and irrevocable confirmation that:
  • the GUC trust and the vesting of its assets are the sole consideration for the committee's release of all challenge rights under paragraph 12 of the DIP orders;
  • the debtors' stipulations and releases in paragraph F of the DIP orders permanently bind all parties in interest in these cases and any successor cases; and
  • no party may reopen, revive or assert any challenge to the prepetition liens, the prepetition secured obligations or the adequate protection obligations.
• After the effective date, the committee survives only to prosecute fee claims for its own and its professionals' pre-effective-date services and to appear in appeals of the confirmation order. The wind-down debtors and the plan administrator pay no other post-effective-date committee fees.
• The committee chooses the GUC trustee, whose identity is to be filed with the plan supplement. The trust agreement must be reasonably acceptable to the debtors and the committee, and the plan governs any conflict with it.
• The trustee's powers and protections:
  • The trustee has sole authority to reconcile, object to, settle and make distributions on general unsecured claims, and acts as the estates' representative under section 1123(b)(3) for that purpose.
  • The trustee owes beneficiaries fiduciary duties of the type a Chapter 7 trustee owes unsecured creditors.
  • The trustee is indemnified solely from trust assets, except for fraud, gross negligence or willful misconduct.
  • All trust fees and expenses are paid solely from the trust, including the cost of professionals the trustee retains without court approval.
• Reclassification requires notice in both directions. The plan administrator must give the GUC trustee at least seven days' notice before seeking to reclassify any claim into a general unsecured claim, and the trustee must give the plan administrator the same notice before moving a general unsecured claim out of the class. Each has standing to object.
• Records and privilege:
  • The debtors and wind-down debtors must give the trustee commercially reasonable access to records on general unsecured claims, at no expense to themselves, and share privileged materials without waiving privilege.
  • Subject to the wind-down budget, they must preserve those materials until the trustee releases them or the trust terminates. They may instead abandon the materials to the trustee.
  • The claims agent may destroy paper records two years after the effective date.
• Beneficial interests are uncertificated, carry no voting or control rights and may not be transferred except in accordance with applicable law. A holder that does not provide tax documentation within 90 days after the trustee's first written request forfeits its distributions and has its claim disallowed, and the funds are redistributed to other beneficiaries.
• The trust dissolves once its distributions are complete, and no later than five years after the effective date unless the court approves a fixed-period extension on a motion filed before the fifth anniversary. Remaining net assets go to unsecured creditors, or to an unrelated section 501(c)(3) charity if they are too small to distribute practicably.

Wind-Down, Reserves and Recovery Waterfall

• The plan leaves the wind-down reserve amount blank. The wind-down budget sets wind-down activities, expenses and the wind-down account funding; it is to be included in the plan supplement and requires the administrative agent's consent.
• After the effective date, the debtors continue as the wind-down debtors. They liquidate remaining assets, resolve and pay claims other than general unsecured claims, file tax returns and administer the plan under the wind-down budget.
  • Their assets vest in them free and clear, except as the plan provides, including the lenders' preserved liens.
  • Those assets exclude assets transferred under the APA, the professional fee escrow and the GUC trust's cash.
• On or before the effective date, the debtors fund a plan administrator reserve in cash, split into a wind-down account sized to the wind-down reserve amount and the professional fee escrow. The reserve also captures distributable assets the wind-down debtors receive after the initial distribution date.
• The reserve pays:
  • wind-down and plan administrator expenses;
  • post-effective-date professional fees; and
  • allowed post-effective-date claims, meaning administrative claims timely filed after the effective date and unpaid as of that date.
• If the reserve falls short on post-effective-date claims, distributable assets received after the effective date pay those claims before any further distribution to Class 3.
• Anything left in the plan administrator reserve or the wind-down account on the dissolution date goes to Class 3. The plan administrator may set up other reserves, or move cash among accounts, only with the administrative agent's consent.
• The wind-down debtors dissolve automatically once two things happen: the plan administrator certifies that all distributions have been made and its duties are complete, and the court enters a final decree closing the last case. With the administrative agent's consent, they may abandon equity in non-debtor entities without further court order.
• Utilities must return deposits and other adequate assurance to the wind-down debtors, by setoff or cash refund, within 30 days after the effective date. The wind-down debtors may withdraw the funds in the utility deposit account held under the utilities order [ECF No. 282].

Plan Administrator

• Rudy Morando, or a successor appointed under the plan administration agreement, becomes plan administrator. The agreement is to be filed with the plan supplement and must be acceptable to the administrative agent. As a plan supplement document, it must also be reasonably acceptable to the debtors, the committee and the administrative agent.
• On the effective date, the debtors' directors and officers are deemed to resign, and the plan administrator becomes sole director and sole officer of each wind-down debtor.
  • The plan administrator acts in a board's fiduciary capacity, serves as estate representative under section 1123(b)(3)(B) and has a trustee's duties under sections 704(a)(1), (a)(2) and (a)(5).
  • The wind-down debtors may continue to employ former directors and officers.
• After the effective date, the plan administrator:
  • has sole authority over claims other than general unsecured claims;
  • implements the wind-down transactions;
  • files final tax returns and may seek expedited tax determinations under section 505(b); and
  • may retain professionals, whose reasonable fees are paid monthly in the ordinary course under the wind-down budget without court approval.
• The wind-down debtors exculpate and indemnify the plan administrator and its professionals, except for fraud, willful misconduct or gross negligence. This protection is subject in its entirety to the plan's exculpation provision. The plan administrator may buy liability insurance at the wind-down debtors' expense.
• The debtors' privileges pass to the plan administrator on the effective date without waiver. Two exceptions: privileges relating to claims released under the plan, and privileges relating to legal advice Davis Polk & Wardwell LLP gave as the debtors' counsel.

Retained Causes of Action

• The retained causes of action are limited to:
  • claims related to Google's advertising practices;
  • claims related to tariff refunds; and
  • any claims the debtors, the committee and the administrative agent agree, by mutual consent, to add to the schedule of retained causes of action, which is to be filed with the plan supplement.
• All proceeds of the retained causes of action are distributable assets payable to Class 3.
• The plan expressly waives preference claims under section 547, and state-law equivalents, against non-insiders. The retained causes of action also exclude claims released by final order, claims assigned to the purchaser under the APA and claims against released parties that the plan releases.
• The wind-down debtors keep the right to pursue the retained causes of action, and the plan administrator may enforce it. No preclusion doctrine applies because of confirmation or because a claim is left off the schedule.

Lender Liens and DIP Order Protections

• The lenders' liens survive the effective date. No lien securing the prepetition loan claims, and no adequate protection lien granted under the DIP orders, is released, and the administrative agent does not have to sign release documents.
  • Those liens are reduced by the amount of each distribution to Class 3 and terminate automatically on the dissolution date.
  • The plan provides that the remaining liens do not affect plan distributions.
• Other liens on estate property are released as plan distributions are made. For secured claims, release also requires payment in full of the allowed secured portion.
• The DIP orders stay in full force after confirmation and bind the debtors, the wind-down debtors, the plan administrator and all parties in interest.
  • The plan, the confirmation order and the plan supplement cannot change them without the administrative agent's prior written consent.
  • The protections the DIP orders give the prepetition secured parties survive confirmation and the effective date, notwithstanding anything else in the plan.
• The plan's releases and exculpation add to, and do not replace, the releases and stipulations in prior final orders of the court.
• Plan distributions are final. The debtors, the wind-down debtors, the estates, the plan administrator, the GUC trustee and anyone acting for them cannot avoid, claw back or seek disgorgement of a distribution under sections 105, 362, 502(d), 510 and 542 through 550, or under any fraudulent-transfer or preference law. Recipients are deemed to take distributions in good faith and for reasonably equivalent value.
• Notwithstanding any other plan provision, the debtors do not receive a discharge under section 1141(d)(3). Article IX.B nonetheless states that the debtors are deemed discharged under sections 1141(d)(1)(A) and 1141(d)(3) on the effective date; the no-discharge provision is drafted to override it.

Key Dates and Deadlines

• Feb. 14, 2018: Date given for the prepetition credit agreement.
• Dec. 3, 2021: The 2021 term loans were issued.
• June 12, 2026: The debtors filed Chapter 11.
• June 15, 2026: The court entered the interim DIP order [ECF No. 74].
• June 23, 2026: The U.S. Trustee appointed the committee [ECF No. 110].
• July 18, 2026: Date of the amended and restated APA with SNBR Inc.
• July 31, 2026: Date of the transition services agreement with SNBR Inc. and its subsidiaries.
• Sept. 4, 2026: The debtors filed the initial plan [ECF No. 616].
• Oct. 15, 2026: The debtors filed the revised plan. The plan's cover carries that date; the signature block for Chief Restructuring Officer Kent Percy is unsigned, and the signature date is left blank.
• The plan leaves the entry date and docket number of the disclosure statement order blank. The voting deadline, voting record date and plan objection deadline are set by reference to that order. The bar date order [ECF No. 473] governs the general claims bar date.
• The distribution record date is the confirmation date, unless the debtors, the wind-down debtors or the plan administrator designate another date.
• The effective date is the first business day after the confirmation date on which no stay of the confirmation order is in effect, all conditions are satisfied or waived, and the debtors declare the plan effective.
• Deadlines tied to the effective date (times are prevailing Eastern Time):
  • Five business days before the anticipated effective date: professionals' fee estimates are due.
  • 30 days after: administrative claims bar date (other than professional fees), and deadline for utilities to return deposits.
  • 45 days after: final fee applications are due, with objections due at 4:00 p.m. 20 calendar days after each filing.
  • 180 days after: claims objection deadline at 11:59 p.m., subject to extension by the court.
  • Two years after: the claims agent may destroy paper records.
  • Five years after: latest dissolution date for the GUC trust, absent an extension.
  • Six years after: end of the required D&O tail coverage period.

Conditions to the Effective Date

• The effective date requires that:
  • the confirmation order has been entered in a form reasonably acceptable to the committee and the administrative agent, and has not been stayed, rescinded, vacated or reversed on appeal;
  • the debtors have obtained all authorizations, consents, regulatory approvals, rulings and documents necessary to implement the plan;
  • all professional fees and expenses already approved by the court have been paid in full;
  • the professional fee escrow account has been funded in full in cash;
  • the plan administrator and the debtors have signed the plan administration agreement, and the plan administrator has been appointed and has taken on its duties;
  • the plan administrator reserve has been created and funded in full in cash, including the wind-down account at the wind-down reserve amount and the professional fee escrow;
  • the GUC trust agreement has been signed, the trust assets have vested in the trust and the cash has been wired to it;
  • all documents needed to implement the plan, including the plan supplement, have been signed; and
  • no law or order preventing consummation is in effect, and no governmental unit has a pending action seeking to stay, enjoin or prohibit consummation.
• With the reasonable consent of the committee and the administrative agent, the debtors may waive or modify any condition other than entry of the confirmation order, without notice or court action. Conditions 4 and 5 (escrow funding and signing of the plan administration agreement) may be waived only with the express written consent of each affected professional; email is sufficient.
• The debtors may cite the failure of any condition as a reason not to seek confirmation or declare the plan effective, whatever the cause, including the debtors' own action or inaction.

Releases, Exculpation and Injunction

• The plan pairs a debtor release with a third-party release that reaches creditors only if they return a ballot without opting out. Holders that do not return a ballot are not releasing parties, and holders in nonvoting classes do not release in that capacity.
• The released parties are the debtors, the wind-down debtors, the administrative agent, the disbursing agents, the lenders, the committee, each holder of a claim that returns a ballot without opting out, and each of their related parties.
  • An entity that opts out on its ballot or by timely objecting to confirmation is not a released party.
  • Neither is an entity that timely objects to the releases, if the objection is not resolved before confirmation.
• The releasing parties are the debtors and their estates, the wind-down debtors, the administrative agent, the disbursing agents, the lenders, the committee and each holder of a claim that returns a ballot without opting out. Their related parties are included to the extent the releasing party has authority to release on their behalf.
• The plan defines nonvoting classes as Classes 1, 2, 6, 7 and 8. That list omits Class 5, which also does not vote.
• Under the debtor release, the debtors, the wind-down debtors and their estates release the released parties from all claims, including derivative claims. The release expressly covers avoidance actions, veil-piercing and alter-ego claims, and contribution, indemnification, lender liability and joint liability claims. It reaches claims relating to:
  • the debtors, the cases and in- and out-of-court restructuring efforts;
  • intercompany transactions and prepetition transactions;
  • the DIP facility, the prepetition loan documents, the plan and the disclosure statement;
  • purchases and sales of the debtors' securities; and
  • business or contractual arrangements between the debtors and any released party, other than assumed contracts and leases.
• The third-party release covers the same subject matter, to the fullest extent applicable law permits. Its list of released theories omits lender liability claims, which the debtor release names expressly.
• Both releases carve out the retained causes of action, claims arising from a released party's willful misconduct (including actual fraud) or gross negligence, and obligations under the plan and its implementing documents.
• A released party loses its own release retroactively if it sues another released party on a released claim arising from a pre-effective-date document or transaction and does not drop the claim on request. This does not apply to actions in the bankruptcy court or another court of competent jurisdiction over the amount, priority or secured status of a prepetition or administrative claim, or to releases granted under settlements or other final orders.
• The exculpated parties are the debtors, the administrative agent, the lenders, the committee and its members, and their related parties.
  • Exculpation covers acts and omissions between the petition date and the effective date relating to the cases, the DIP facility, the plan, the disclosure statement and the sale.
  • It excludes acts that a final order determines were willful misconduct (including actual fraud) or gross negligence.
  • Each exculpated party may raise reliance on the advice of counsel as a defense, and the plan deems the exculpated parties to have satisfied any fiduciary duties they owed in the cases.
• A permanent injunction bars actions on released or exculpated claims. It also bars setoff, unless the holder preserved the right in a timely proof of claim or was excused from filing by final order.
• The plan also sets up a gatekeeping procedure. Before anyone can sue a released or exculpated party on a matter tied to a released or exculpated claim, they must:
  • get a bankruptcy court determination, after notice and a hearing, that the claim is colorable and was not released, attaching the proposed complaint; and
  • get a final order specifically authorizing the suit.
• The gatekeeping request must include a proposed attorney fee reserve, deposited in the court registry, to cover defendants' costs if they successfully defend. The bankruptcy court has sole and exclusive jurisdiction to decide whether a claim is colorable.

Consent Rights, Modification and Withdrawal

• The administrative agent and the committee hold reasonable consent rights over:
  • modification, revocation or withdrawal of the plan;
  • the plan supplement and amendments to it through the effective date;
  • the form of the confirmation order;
  • waiver of effective-date conditions; and
  • any court alteration of an invalid plan provision.
• The administrative agent alone must consent to the wind-down budget, abandonment of non-debtor equity, additional reserves, cash transfers among accounts and the plan administration agreement. Any change to the DIP orders requires its prior written consent.
• The GUC trust agreement must be reasonably acceptable to the debtors and the committee. Adding retained causes of action requires the mutual consent of the debtors, the committee and the administrative agent.
• If the plan fails to win the required vote, Article III lets the debtors reclassify claims or amend, modify or withdraw the plan, in whole, in part or as to a particular debtor, with the administrative agent's reasonable consent. The parallel provision in Article XI reserving the right to reclassify claims and interests does not mention consent.
• If the plan is withdrawn as to a debtor because of a failed vote or denial of confirmation, that debtor may, with the administrative agent's reasonable consent, either have its case dismissed or sell its assets to another debtor for cash at a fair value the debtors propose and the court approves.
• Between confirmation and the effective date, the debtors may make technical changes without court approval if they do not materially and adversely affect holders' treatment. The debtors may revoke or withdraw the plan before confirmation, in which case it becomes void.

Voting and Confirmation

• Classes 3 and 4 vote. Each class accepts if holders of at least two-thirds in amount and more than one-half in number of the allowed claims actually voting accept. A voting class in which no holder votes is presumed to accept.
• Holders vote by ballot, which also carries the release opt-out. The claims agent must receive ballots by the voting deadline.
• The plan contemplates a disclosure statement order that approves the disclosure statement, sets voting procedures and schedules the confirmation hearing; the filed plan leaves that order's entry date and docket number blank.
• A class with no allowed or temporarily allowed claims as of the voting deadline is eliminated for voting purposes. If the court finds a claim misclassified, the claim and its ballot move to the correct class without resolicitation.

Changes From the Initial Plan

• The revised plan removes the plan administrator and the GUC trustee from the released parties, the releasing parties and the exculpated parties. It also drops the plan administrator from the parties granting the debtor release.
• The wind-down debtors' exculpation and indemnification of the plan administrator is now subject in its entirety to the plan's exculpation provision.
• Under the initial plan, exculpated parties could reasonably rely on the advice of counsel. Under the revised plan, they may raise reliance on that advice as a defense.
• The initial plan defined the paydown order as an order approving the debtors' paydown motion, filed Sept. 4, 2026. The revised plan defines it by reference to the order at ECF No. 671.
• The revised plan keeps the provision denying the debtors a section 1141(d)(3) discharge but drops a proviso from it. That proviso would have made post-effective-date collection of claims against the debtors subject to a paragraph of the confirmation order; the paragraph number was left blank.
• The revised plan also corrects the sale order citation to ECF No. 470 from ECF No. 430 and redefines intercompany interests as prepetition interests, rather than claims, in a debtor held by another debtor.

D&O Insurance and Indemnification

• The wind-down debtors assume all insurance contracts, including the D&O policies, with $0 cure costs.
  • They must maintain six years of director, officer and employee liability tail coverage after the effective date, on terms no less favorable than, and with an aggregate limit no lower than, the existing coverage.
  • They may not cancel or reduce D&O coverage for conduct before the effective date.
• Indemnification obligations to current and former directors, officers, managers and employees, and the debtors' other indemnification obligations to those individuals and to the debtors' professionals, are assumed and survive confirmation. Recovery is limited solely to insurance.
  • Provided the wind-down debtors have maintained the D&O policies, indemnitees have no recourse to the wind-down debtors, the plan administrator, the reserves, the professional fee escrow, the GUC trust or distributable assets.
  • Nothing has to be advanced or funded except as needed to maintain the D&O policies.
• Indemnification does not cover claims on which a final order finds the indemnitee liable for fraud, willful misconduct, gross negligence, bad faith, self-dealing or breach of the duty of loyalty.

Distribution Mechanics

• The plan administrator sets an initial distribution date on or soon after the effective date, followed by interim distributions. The final distribution can be no earlier than 20 calendar days after all disputed claims are resolved.
• The GUC trustee makes general unsecured distributions. Class 3 distributions go through the administrative agent, and the wind-down debtors reimburse its reasonable post-effective-date costs of making them.
• No distribution is required to a holder whose distributions total less than $250. No interim distribution is required unless the total exceeds $10,000.
• Claims transferred after the distribution record date are not recognized. A transfer made 20 or fewer calendar days before that date is honored only if the transferor gives an unconditional certification and waiver of objection.
• Unclaimed distributions are forfeited 90 calendar days after being returned, and checks are void if not cashed within 120 calendar days. The cash reverts to the wind-down account or the GUC trust, free of escheat laws.
• Guarantees between debtors and joint and several liability are eliminated for distribution purposes, so each obligation receives a single distribution. For the GUC trust, all general unsecured claims are administratively merged into single obligations of the trust, while setoff still treats the debtors as separate entities.
• A holder that is also paid by a third party must return any excess within 14 calendar days and owes interest at the federal judgment rate after that. Claims satisfied by insurers may be expunged without an objection.
• Postpetition interest does not accrue and is not paid except under section 506(b), the plan or the confirmation order. Governmental units' statutory interest rights are preserved.

Claims Administration

• After the effective date, the plan administrator has sole authority to object to and settle claims other than general unsecured claims, and the GUC trustee has the same authority over general unsecured claims, without court approval. Neither may object to a claim allowed by final order or by the plan, and objections are due by the claims objection deadline.
• Late-filed proofs of claim are disallowed without an objection unless a final order or consent permits them; any distribution is limited to the undisputed, noncontingent and liquidated scheduled amount. Amending a claim after confirmation requires authorization.
• The court may estimate contingent, unliquidated or disputed claims, and the estimate caps the claim except for estimates made only for voting. A holder seeking reconsideration must file a motion within 20 calendar days after the estimate.
• A holder that is or may be liable to the estates on a cause of action receives nothing until that matter is resolved. Section 502(d) bars allowance until amounts owed are paid, without prejudice to administrative claimants' right to argue that section 502(d) does not apply to them.
• Creditors may set off only if they preserved the right in a timely proof of claim or were excused from filing by final order. The debtors' setoff and recoupment rights are preserved.

Parties and Advisors

• Debtors: Sleep Number Corporation, Select Comfort Retail Corporation, Select Comfort Canada Holding Inc., Select Comfort SC LLC and Sleep Number Health Corporation, represented by Davis Polk & Wardwell LLP; Kent Percy is chief restructuring officer.
• Committee: represented by Pachulski Stang Ziehl & Jones LLP.
• Administrative agent under the prepetition credit agreement: represented by Faegre Drinker Biddle & Reath LLP.
• Purchaser: SNBR Inc.
• Plan administrator: Rudy Morando.
• GUC trustee: to be selected by the committee and identified in the plan supplement.
• Claims and noticing agent: Kroll Restructuring Administration LLC.