Oreck Corporation, the Nashville-based manufacturer of upright vacuums and cleaning products, filed for Chapter 11 bankruptcy protection and could reach an agreement to sell its assets in a few days, court filings revealed, as reported in The Tennessean. A Chapter 11 filing will allow Oreck to consolidate its assets and restructure its finances as part of an effort to sell the business, the company said in a statement released Tuesday.
Court filings, Oreck Corp., along with eight affiliated entities that filed for Chapter 11, "are in a precarious financial position." The company is losing money, sales "are quickly deteriorating," the filing stated; it "simply cannot generate cash fast enough to cover expenses as they arise."
Oreck's former CEO, Doug Cahill, said he left in March after making several unsuccessful attempts to buy the company from its owner, Black Diamond Capital Management, an asset management firm with offices in Connecticut and Illinois," Cahill said.
"I didn't like the direction they were taking or how they were dealing with us," Cahill said, "so I resigned.It's hard to believe a 50 year-old company can be in this bad of shape in 50 days," he added.
"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 company also stated.
According to a forecast it submitted in its filings, Oreck expects to have a negative cash flow of nearly $3.2 million during the next three months.
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.
Oreck has about 70 employees in the corporate office in Nashville, and it employs 250 workers at its plant in Cookesville. The company also has about 325 employees at its 96 company-owned retail stores. .
Oreck was founded in 1963 by David Oreck, who started by selling vacuum cleaners by mail, news reports said.
