Vacuum maker, Oreck Corp has filed for bankruptcy in Nashville, Tennessee. USA Today reported that the manufacturer has filed for Chapter 11 bankruptcy protection.
This filing will allow the company to consolidate assets and restructure finances in order to sell the business, said Oreck in a statement.
USA Today reported that the court filings said that Oreck is in a "precarious financial position." It also said that the company is losing money and can't generate cash on a fast enough basis to cover expenses. "Executives who put Oreck under Chapter 11 protection on Monday blamed the company's financial hardship on increased competition. They also cited a push to sell vacuum cleaners and other products in its 96 retail stores rather than directly to consumers-a transition that has come with a "greater delay and costs than anticipated," according to papers filed with the U.S. Bankruptcy Court in Nashville, Tenn," reported The Wall Street Journal.
Oreck's CEO Dough Cahill resigned in March. "I didn't like the direction they were taking or how they were dealing with us," Cahill said to USA Today, "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 said in a statement.
Wall Street Journal reported that the protection could put the company back in the hands of the founder David Oreck and his family.
WSJ reported that the company said they have plans on selling its operations and some members of the Oreck family are putting a bid together to buy the company back.
The company was founded in 1963 to manufacture vacuum cleaners that were lightweight and upright.
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