Vacuum cleaner company Oreck filed for protection from its creditors late on Monday, citing more than $30 million in liabilities, and is headed to the sale block.
Officials at the company, which has been headquartered in Nashville since 2008, said in Chapter 11 court filings that they are in a “precarious financial position” and that sales are “quickly deteriorating.”
“The Debtors intend to finance a potential sale of the Debtors as a going concern and thereby avert liquidation,” the filings read.
In addition to Oreck Corp., eight other entities have filed for Chapter 11. The main operating company is asking that the entities’ bankruptcies be administered together. (Click here for a list of the entities' top creditors.)
The largest single debt belongs to ASP Oreck Inc., which owes more than $10 million to Wells Fargo Bank and nearly $5.5 million to Broadpoint Products. Oreck Manufacturing, meanwhile, has more than $3.5 million in unsecured claims from foreign manufacturing companies in China and Hong Kong.
Oreck’s proposed Chapter 11 reorganization plan includes borrowing more money through debtor-in-possession financing. The new financing consists of a $6 million revolving line of credit and a $5 million term loan from a bank group.
A projection of operations included in the bankruptcy filings shows that the company expects to lose more than $3.1 million between now and Aug. 2.
“At this time ... the availability to the Debtors of sufficient working capital and liquidity through the incurrence of new indebtedness and other financial accommodations are necessary to the confidence of the Debtors’ vendors and suppliers of other goods and services,” the company claims in court documents.
According to filings, Oreck has about 70 employees at its headquarters in the Highland Ridge II building near Nashville International Airport and 250 employees at a call center in Cookeville. The company also has 325 employees at 96 company-owned retail stores and sells inventory to an additional 250 independently owned stores.
In a statement, company representatives were forthright about their plans to sell the company, which was founded in 1963. (Click here for a brief history from its website.)
"Oreck will continue to operate in the ordinary course of business while the sale process takes place, with authorized and exclusive dealers and other trade customers continuing to receive product for sale to ultimate consumers," the statement said. "It is anticipated that following the closing of the sale that plant operations and corporate headquarters will remain in Tennessee."
Bill Norton of Bradley Arant Boult Cummings is representing the company in its bankruptcy proceedings.
We will update this story as more information becomes available.