Oreck filed for bankruptcy on Tuesday and is now looking to sell the well-known vacuum company. The Nashville-based manufacturer filed under Chapter 11 bankruptcy protection.
The company will now look for a buyer after changes in management didn’t pan out. Their vacuum sales have drastically dropped ever since, forcing Oreck to file for bankruptcy.
The company’s downfall won’t end until they sell off their assets, but some believe a deal could be made within the upcoming days. By filing under Chapter 11, Oreck will be able to consolidate its assets and restructure its finances before completing the sale.
According to court filings, Oreck’s bankruptcy is primarily a result of losing too much money, as the company “simply cannot generate cash fast enough to cover expenses as they arise.”
Black Diamond Capital Management, a firm with locations in Connecticut and Illinois, is currently the owner of Oreck Corp. and the management firm plans on borrowing $11 million through debtor-in-possession financing. This strategy was set in place to provide cash-strapped companies with financing under Chapter 11 bankruptcy protection.
According to Walker Moskop of The Tennessean, Black Diamond said in filings that they could reach an agreement to sell “substantially all” of Oreck’s assets before the week is up.
Over the next three months, the company expects to lose around $3.2 million more than they already have. Oreck must have seen this coming, as they’ve laid off a substantial amount of employees twice since October of 2012.
David Oreck founded the company in 1963 after receiving an abandoned design from Whirlpool. He made it his own before the company took off and he’s been used in commercials and marketing strategies ever since.
As of today, Oreck vacuums can be found in stores all over the United States, Canada, and parts of Europe. It is unknown what changes will be put in place after the sale is complete.
Have you ever bought an Oreck’s vacuum? If so, is Oreck’s bankruptcy and eventual sale shocking or was it only a matter of time?