The owner of Hoover and Dirt Devil vacuums has approval from the U.S. Bankruptcy Court to buy the assets of bankrupt vacuum maker Oreck Corp. for $17.25 million in cash, plus assumed liabilities.
Judge Keith Lundin of the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville approved the sale at a hearing on July 16.
Royal Appliance Manufacturing Co. beat out the Oreck family, which placed a stalking horse bid that included $14.5 million in cash, plus assumption of liabilities, for a total of $21.9 million, on May 16. The deal is expected to close July 24.
The family placed its bid through Oreck Acquisition Holdings LLC. At a July 8 auction, the family was outbid when Royal, bidding as Oreck Acquisition Co. LLC, upped the cash portion of its bid to $17.25 million, court documents show.
Royal plans to maintain Oreck’s Cookeville, Tenn., facility. Oreck also has a facility in Nashville. The buyer is a subsidiary of TTI Group, a Hong Kong-based company that makes Hoover and Dirt Devil vacuums, as well as other consumer, professional and industrial products.
The Oreck family’s stalking-horse bid included $14.5 million in cash, the assumption of certain liabilities, up to $1 million in cure amounts, up to $3.8 million in warranty claims, up to $400,000 in coupon liability, up to $300,000 in royalty payments owed to Contico International Inc., customer return liability up to $1.4 million, credit balances up to $982,000, and U.S. Trustee fees up to $50,000.
Oreck filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville on May 6. The filing came after a series of moves meant to resuscitate the company, which only had 4 percent of the vacuum market, in terms of sales, in 2012. Oreck had also changed CEOs, switched its headquarters and tried to modernize by manufacturing bagless vacuums.
The company also struggled to overcome deteriorating economic conditions, it says in court papers.
The company hired Sawaya Segalas & Co. to explore sale options.