Oreck Bankruptcy: What Caused Chapter 11 For Vacuum Company? Was Dyson To Blame? [VIDEO & REPORT]

By Staff Reporter | May 8, 2013 6:49 PM EDT

Oreck is filing for bankruptcy after 50 years as one of the most recognizable vacuum cleaner manufacturers in America. Remember these old commercials? (Photo: YouTube / OreckCommercial)
Oreck is filing for bankruptcy after 50 years as one of the most recognizable vacuum cleaner manufacturers in America. Remember these old commercials? (Photo: YouTube / OreckCommercial)

Oreck filing for bankruptcy? Say it isn't so! The Nashville-based vacuum and cleaning product manufacturer has indeed filed for Chapter 11 bankruptcy protection and could be selling its assets in a matter of days, according to court documents.

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"It's hard to believe a 50-year-old company can be in this bad of shape in 50 days," said CEO Oreck's former CEO Doug Cahill, who left in March after several failed attempts to buy the company from its current owners. Cahill did not feel the owners were supportive of recuperative strategies he wanted to pursue.

But fear not that the nation's floors will go un-vacuumed, at least for the time being. Oreck has said that the bankruptcy filing will not interrupt the company's daily operations.

"Oreck will continue to operate in the ordinary course of business while the sale process takes place," the company declared in a statement, "With authorized and exclusive dealers and other trade customers continuing to receive products for sale to ultimate consumers."

Just months ago, Oreck presented new vacuum models at IHA's 2013 press preview event:

Oreck's Chapter 11 bankruptcy filing will allow the manufacturer to consolidate assets and restructure finances as part of an effort to sell the business, according to a statement the company released Tuesday.

The company statement gave few details, but the bankruptcy filings reveal a company floundering amid falling sales and changes in the ranks.

Oreck filed for Chapter 11 along with eight affiliated companies, all of which "are in a precarious financial position." The company laid off an undisclosed number of employees at the end of January, after a previous wave of lay-offs in October 2012. Cahill said at the time that the layoffs weren't a cost-cutting measure, but rather a result of a shift away from the company's old emphasis on direct sales.

A bit of nostalgia: Nothing gets by an Oreck!

How is it that a classic brand like Oreck is filing for bankruptcy after decades in the business? It could have something to do with Oreck's somewhat old-fashioned design selection. The company didn't release a bagless vacuum until just recently, leaving it years behind other models that long ago began to incorporate comparatively space-age features like air filters and sleek, lightweight shapes.

Just look at Dyson. Dyson vacuums use cyclonic separation to separate dust and dirt particles from the air stream. Several stages of cyclones in the vacuum use centrifugal force to throw particles out of the airflow and onto the wall of the vacuum container, from which they fall into a bin. Dyson claims that centrifugal forces can reach G-forces of up to 100,000!

Meanwhile, Oreck is still weaning itself off of bags. The old-fashioned Oreck approach, charming though it may be, may have had something to do with the company's drop in sales. 

The bankruptcy could be bad news for locals in this struggling economy. About 70 employees work at Oreck's corporate office in Nashville, while 250 are employed at its plant in Cookeville. The company has an additional 325 employees spread throughout its 96 company-owned retail outlets.

Oreck was founded in 1963 by David Oreck, who started the company after buying an abandoned design for an upright vacuum cleaner from Whirlpool. Oreck started out selling the vacuums by mail, but eventually built a distribution and manufacturing center in New Orleans. The company was centered there until 2005, when Hurricane Katrina provoked it to shift operations to Tennessee.

After Oreck has been sold, the company said it anticipates that the plant operations and corporate headquarters will remain in Tennessee.

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