Oreck Bankruptcy Court Approves sale of Oreck bankruptcy assets to Hoover
Hoover outbids the Oreck family at the 363 Auction of Oreck’s assets. The Bankruptcy Court approved the sale of the Oreck assets to Hoover on Tuesday.
Motion to Sell to Hoover under Bankruptcy Code Section 363
On July 16, 2013, the United States Bankruptcy Court for the Middle District of Tennessee approved the sale of Oreck’s assets to Royal Appliance Manufacturing Co., the Ohio-based subsidiary of TTI Floor Care of Hong Kong, the manufacturer of Hoover vacuum cleaner. Hoover is paying $17.25 million in cash plus the assumption of certain debts and liabilities (totalling over $25 million).
Royal outbid the Oreck family to acquire the assets at the 363 sale auction by approximately $1.0 million. Oreck’s founder, David Oreck, and other family members pooled together money for a bid that was originally valued at about $22 million to open the auction, which lasted eight hours on Monday. A subsidiary of Hong Kong-based Techtronic Industries Co. offered a winning bid of more than $24 million and said it plans to keep Oreck Corp.’s 250-worker plant operating in rural Cookeville, Tenn. Company officials haven’t decided what to do with Oreck’s roughly 95 retail stores but are considering letting existing franchisees and employees take some over.
Royal has said that it plans to keep the Oreck factory in Cookevill, Tenn, retaining all of its 200+ workers. Oreck’s Nashville headquarters will close. (Oreck had moved certain of its manufacturing facilities from New Orleans to Nashville after Hurricane Katrina.)
Approximately 250 Oreck factory outlet stores will remain open.
Oreck Corp. filed for Chapter 11 Bankruptcy protection on May 6, 2013 in the United States Bankruptcy Court for the Middle District of Tennessee. The lead case No. is 13-04006, the associated cases are within case Nos. 13-04008 through 13-04017. The case is pending before the Honorable Keith M. Lundin.
Royal Appliance Manufacturing Co. / TTI Floor Care North America
TTI Floor Care North America is the U.S. arm of the Hong Kong conglomerate TTI, which also owns power-tool and outdoor-power-products brands Ryobi and Homelite, among others. The company’s annual sales total $4 billion, with about one-fourth of that in vacuum cleaners and other floor-care products. TTI bought the Hoover brand in 2007. Most of TTI/Royal’s products, including the Hoover and Dirt Devil vacuum cleaners, are now made in China, although there are Hoover plants in El Paso, Texas, and Juarez, Mexico, as well.
History of Oreck
Oreck was founded in 1963 by David Oreck shortly after heMr. Oreck left electronics company RCA. The company was originally a vacuum manufacturer for U.S. hotels, and Oreck claims today that more than 50,000 hotels around the world use its vacuum cleaners. The machines gained popularity among hotels for their light weight.
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. Cahill said he felt the firm wasn’t supportive of the strategy he wanted to pursue. ”I didn’t like the direction they were taking or how they were dealing with us,” Cahill said, “so I resigned.” He said he was disappointed by what was happening. ”It’s hard to believe a 50-year-old company can be in this bad of shape in 50 days,” he said.
