Case Study - Oreck

THE CHALLENGE

In 2013, this leading vacuum cleaner manufacturer and retailer was highly leveraged with rapidly falling sales. Management was in turmoil and had been replaced several times in recent years. There had been multiple owners since the family had sold out to a Private Equity firm. Employee morale was rock bottom and layoffs were frequent. The CEO had left and the other “C” level officers were departing. A Chief Restructuring Officer was brought in to turn around the failing enterprise.

THE METHOD

Devonshire was engaged by the principal owners and lenders. William T. Nolan was hired as the Interim Chairman and President to evaluate and recommend a plan to save the enterprise or put it into Chapter 11 bankruptcy. Mr. Nolan helped negotiate a settlement with an insurance company that gave the Company enough cash to continue operations and sales for several months while Due Diligence was done to decide upon a plan. The Company filed for Chapter 11 to reorganize and secure Debtor In Possession financing, in order to provide Working Capital and to prepare the assets for a 363 Sale. The Company hired a boutique investment bank to market the assets to investors and strategic buyers.

THE RESULT

An Auction was held and the winning bid was submitted by Royal Appliance Manufacturing Co., a subsidiary of Hong Kong-based Techtronic Industries Co. Ltd., which also owns the Hoover brand. Royal has provided new management and marketing muscle to revive the Oreck brand and to strengthen the network of Oreck stores with the Royal and Hoover brands.