Mattress Firm has three stores in Austin, Texas, within half a mile of one another. In Winston-Salem, North Carolina, it has two stores with identical hours at about the same distance. Schererville, Indiana (population 28,701), once had five shops less than a block apart. While retailers across the US were shuttering outlets and more commerce was moving online, the mattress company was bucking the trend, going from about 700 locations to 3,500 in five years before filing for protection from creditors last month.

Was it the breakneck growth alone that landed Mattress Firm in bankruptcy court? Or, as the company claims in a lawsuit filed last year, did a pair of greedy executives — taking advantage of the strategy to skim money off its real-estate deals and enrich an outside accomplice — help it get there? The answer may hold lessons for America’s biggest mattress seller now that it has emerged from bankruptcy court after a fast-track restructuring. The company blamed overexpans...

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