It seems that Oreck Corp., known for their household vacuum cleaners, can’t stop debtors from vacuuming up all their money. Facing a $3.2 million negative cash flow in the next three months, Oreck has filed for Chapter 11 bankruptcy, and owners hope that the company and its assets can be sold in the next few days.
The Nashville-based Oreck is currently owned by Black Diamond Capital Management. According to USA Today, court documents reveal that Oreck is in a precarious financial position, and that management departures and falling sales have left the company struggling to survive. Within the last year, Oreck laid off a substantial number of employees twice; once in October 2012, and once this past January. Former CEO Doug Cahill said that the layoffs were not related to financial troubles, but as part of the company’s shift away from direct sales.
Cahill himself resigned as CEO in March after butting heads with Black Diamond Capital Management. “I didn’t like the direction they were taking, or how they were dealing with us, so I resigned,” Cahill told USA Today. Before his resignation, Cahill made several attempts to purchase Oreck from Black Diamond, but each of these attempts failed. Ironically, Oreck’s Chapter 11 filing may give Cahill another opportunity to purchase the company.
The company indicated in court filings that it was hopeful it could reach an agreement to sell all of its assets in the next several days. If no agreement is made, liquidation would be the next likely scenario.
Oreck was founded 50 years ago by David Oreck as a mail order vacuum cleaner service. The company currently has 70 employees at their corporate office in Nashville, 250 employees at a plant in Cookeville, and 325 employees at 96 company-owned retail stores around the country.