Oreck, a nationally known vacuum company founded in in 1963 by David Oreck has filed for Chapter 11 bankruptcy protection, and could reach an agreement to sell its assets in a matter of days, according to court filings. Oreck sells its products in hundreds of Oreck Clean Home Centers, through major retailers, and through phone and online direct sales. The company distributes products in the U.S., Canada and parts of Europe.Oreck Corp., the Nashville-based manufacturer of upright vacuums and cleaning products.
A Chapter 11 filing will allow Oreck to consolidate its assets and restructure its finances as part of an effort to sell the business. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship. When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11.
Oreck expects to have a negative cash flow of nearly $3.2 million during the next three months. Oreck has about 70 employees in the corporate office in Nashville, and it employs 250 workers at its plant in Cookeville. The company also has about 325 employees at its 96 company-owned retail stores. Oreck laid off an undisclosed number of employees at the end of January, as well as in October 2012. At the time, Cahill said the layoffs weren’t a cost-cutting maneuver, and were instead a result of a shift away from the company’s traditional emphasis on direct sales.
To maintain operations, Oreck intends to borrow $11 million through debtor-in-possession financing, a special form of financing provided for financially distressed companies under Chapter 11.
Oreck said in its statement that the company will continue daily operations without interruption.