Roomba vacuum cleaner maker iRobot is filing for bankruptcy: The whole story in 5 points
iRobot, maker of the Roomba robotic vacuum cleaner, has filed for Chapter 11 bankruptcy in the US as mounting debt, increased competition and tariff pressures force a change in ownership.
iRobot, once seen as the company that brought robotic cleaning to Indian and global homes, is facing its toughest times yet. The maker of the popular Roomba vacuum cleaner has filed for Chapter 11 bankruptcy protection in the US, marking a steep decline for the brand that once dominated the consumer robotics sector. The filing comes after years of financial pressure, increased competition, tariff-related cost shocks and the collapse of a high-profile acquisition deal that was expected to turn around the company’s fortunes.
iRobot, maker of Roomba vacuum cleaners, files for bankruptcy: The whole story in 5 points
1. Chapter 11 Filing and Ownership Change
iRobot has filed for Chapter 11 bankruptcy protection in the US, presenting its case in the District of Delaware on December 14. As part of the court-supervised restructuring, control of the company will pass to Centrum Hong Kong along with its primary manufacturer and lender Shenzhen PICEA Robotics. Once the process is complete, iRobot will effectively go private.
2. Existing shareholders will be wiped out
Under the proposed bankruptcy plan, Shenzhen PICEA will take 100 percent ownership of the reorganized iRobot. This means that the company’s existing common stock will be canceled, leaving existing shareholders with no equity. The move comes after years of financial stress and mounting debt that iRobot struggled to manage on its own.
3. Business should continue without any interruption
Despite the bankruptcy filing, iRobot says it will continue to operate as a going concern. The company has assured that employee commitments will be honored and vendors and suppliers will be paid in full during the restructuring process. iRobot also clarified that customers should not see any disruption in app services, product support, global partnerships or supply chain operations.
4. Why did iRobot get into trouble?
The Roomba maker is battling declining earnings in 2021 due to aggressive competition from low-priced Chinese brands like Ecovacs, rising manufacturing costs and new US tariffs. A 46 percent tariff on imports from Vietnam, where iRobot makes vacuums for the U.S. market, added about $23 million to the cost alone. The company also had about $190 million in debt, much of it tied to a loan due in 2023 while the proposed Amazon acquisition was under regulatory review.
5. From market leader to restructuring mode
Founded by three MIT engineers in 1990, iRobot once symbolized the rise of home robotics, having sold more than 50 million robots globally. Its valuation peaked at about $3.56 billion in 2021 during a surge in pandemic-driven demand. However, following the collapse of the $1.4 billion Amazon buyout and continued losses, the company’s value has declined sharply. Commenting on the filing, CEO Gary Cohen said, “Today’s announcement is an important milestone in securing the long-term future of iRobot.”
