Oreck Corporation, the Nashville, Tenn.-based vacuum maker, has filed for Chapter 11 bankruptcy protection from its creditors, citing more than $30 million in liabilities, the company announced Tuesday.
The Chapter 11 filing will allow Oreck to restructure its debts and reorganize finances so that it can stay open. Officials also plan to sell the privately owned company
, according to The Tennessean.
David Oreck founded the company in 1963 after developing a lightweight upright vacuum cleaner for the hotel industry that reportedly was so effective hotel personnel wanted them for their own use at home. That led to the idea of marketing the upright vacuum cleaner to the general public, according to website Family Business Experts.
Urgent: Is Obamacare Hurting Your Wallet? Vote in Poll
Oreck spent decades proving himself a marketer extraordinaire, especially on television, and later passed the baton to his son Tom.
"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 said in a statement. "It is anticipated that following the closing of the sale that plant operations and corporate headquarters will remain in Tennessee."
According to court filings, Oreck, 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 states, and it "simply cannot generate cash fast enough to cover expenses as they arise."
Former CEO Doug Cahill left in March after making several attempts to buy the company from its current owner, Black Diamond Capital Management, an asset management firm.
"I didn't like the direction they were taking or how they were dealing with us," Cahill told The Tennessean, "so I resigned. It's hard to believe a 50-year-old company can be in this bad of shape in 50 days."
ALERT: Government ‘Blunder’ Spawns Massive Profit Opportunity
The company said in filings that it could reach an agreement to sell "substantially all" of its assets in the next several days, but that the deal was not a certainty. "If a deal is not reached," a filing says, "it is possible that a liquidation and wind down of the Debtors may ensue."
Judge: Stockton, Calif., Can File for Bankruptcy
Chrysler Bankruptcy Lawyer Top Pick for Detroit Manager
Electric-Car Maker Coda Files for Bankruptcy to Seek Sale
© 2014 Newsmax. All rights reserved.