Blue Torch Agrees to Buy Bankrupt Pillow Maker From H.I.G.

Blue Torch Capital has decided to buy bankrupt pillow maker Pegasus Home Fashions Inc. from H.I.G. Capital, which took over the company two years ago.

Under the deal, which must be approved by the judge overseeing Pegasus’ bankruptcy, affiliates of Blue Torch have agreed to be the stalking horse, or lead bidder, at an auction for the company, according to court filings. The value of the deal is likely to be made public once court papers with more details are filed in the Chapter 11 case.

Pegasus filed for bankruptcy Thursday in Wilmington, Delaware after a cash crunch and ...