Sleep Number Plunges 70% Ahead of a Potential Bankruptcy Filing

Sleep Number Corp. stock dropped 70% on Thursday, as the company lays the groundwork for a potential bankruptcy filing.

As part of those efforts, the company has approached lenders for new financing which could be structured as a bankruptcy loan, according to people familiar with the matter, asking not to be identified discussing private information.

A representative for Sleep Number didn’t respond to requests for comment. The firm’s banker, Guggenheim Partners, declined to comment. The Wall Street Journal earlier reported that Sleep Number was preparing to file for Chapter 11.

Sleep Number, known for its customizable beds, has ...