Roomba maker iRobot files for bankruptcy

Credit: iRobot

iRobot Corp., the Massachusetts-based company known for its Roomba robotic vacuum cleaners, filed for Chapter 11 bankruptcy protection in Delaware on Sunday.

The filing comes after a failed acquisition attempt by Amazon and increased pressure from tariffs and competition.

Under the prepackaged restructuring plan, iRobot will be acquired by Shenzhen Picea Robotics Co., its primary contract manufacturer in China.

The company listed assets of between $100 million and $500 million and liabilities in the same range in its bankruptcy petition.

Among its debts, iRobot owes almost $100 million to Picea, $2.7 million to the Chinese electric vehicle maker BYD and $3.4 million to U.S. Customs and Border Protection for unpaid tariffs.

Picea, founded in 2016, has more than 7,000 employees and has built and sold over 20 million robotic vacuum cleaners. 

The bankruptcy process is expected to conclude by February, with iRobot transitioning to private ownership under Picea.

iRobot's shares dropped nearly 70% to $1.31 in premarket trading on Monday.

The firm, founded in 1990 by three researchers from the Massachusetts Institute of Technology, initially developed robots for military and space applications before launching the Roomba in 2002.

U.S. import duties of 46% on goods from Vietnam, where some manufacturing occurs, added $23 million in costs, according to company statements.

The attempted $1.7 billion sale to Amazon, announced in 2022, fell apart last year due to regulatory hurdles from the European Union, resulting in a $94 million termination fee paid by Amazon.

Following that, iRobot laid off about 350 employees, roughly a third of its workforce, and issued warnings about its financial viability. 

"The transaction will strengthen our financial position and will help deliver continuity for our consumers, customers, and partners," said iRobot chief executive Gary Cohen in a statement.

The company stated that the filing will not disrupt device operations, app functionality, supply chains or product support.  

"Today’s announcement marks a pivotal milestone in securing iRobot’s long-term future," Cohen added.