Oreck, a manufacturer of upright vacuums and cleaning products, filed for Chapter 11 bankruptcy protection. Oreck is owned by asset management firm Black Diamond Capital Management.
According to bankruptcy court filings, all Oreck assets are subject to a lien securing a $20 million revolving line of credit provided by a pre-petition lender group led by Wells Fargo as administrative agent. Assets are also subject to a lien securing a $5.5 million revolver provided by Broadpoint Products as administrative agent for pre-petition second lien lenders.
The documents showed that Oreck sought court approval to enter into a DIP financing facility of up to $11 million from certain lenders led by Black Diamond Commercial Finance as administrative agent. The purpose of the financing was to support a potential sale of the company as a going concern and thus avert a liquidation and wind-down. According to the filings, a key provision of the DIP financing was that a portion would be used to purchase pre-petition first lien lender debt with the balance to be used to cover amounts under an established budget.
According to a June 19 article in The Tennessean, members of the founding Oreck family submitted a bid of about $23 million to take the company out of bankruptcy. The family’s bid, under the entity Oreck Acquisition Holdings, would allow the Orecks to reclaim the company founded in 1963 by David Oreck. His son Tom Oreck, a former CEO of the company, would resume that role if the bid is successful, The Tennessean reported.