Oreck Corp, a TN company owned by Black Diamond Capital Management, filed Chapter 11 Bankruptcy on May 6, 2013. Despite its well-known brand name, the company has been facing financial losses for many months.
Oreck has 325 employees at its 96 retail stores, and another 320 workers between its factory and corporate staff. It is reported that members of the Oreck family are in planning to make an offer in the bankruptcy proceedings to repurchase the company from its investment banker owners, who took control of the company a few year ago. This will likely result in a bidding process before the bankruptcy court, in order to arrive at the best offer for the company’s creditors.
News reports claim that the company faced mounting debts due to its failure to recognize that fewer consumers were willing to purchase their vacuums at company stores, rather than at more convenient mass-marketers like Walmart, Target and Amazon. Also, the company was slow to move to a bagless model, similar to the Dyson and other competing brands mainstays, and it continued to use outdated infomercial sales, rather than a more current marketing model. Finally, the vacs were not kept current in their styling, appearing boxy and outdated.
While many purchasers praised their Oreck’s sturdiness and performance, at an admittedly high price, their numbers did not keep pace with the rising costs of manufacturing and sales of the product. The bidders, led by Thomas Oreck, the son of founder David Oreck, is hoping to acquire the brand name and rights, and to bring their family’s namesake product back into relevance in today’s appliance marketplace.
Stay tuned for further updates, until the dust settles on this controversy.
Michael B. Katz, Esq.