iRobot Corporation: Prepackaged Plan Transfers Ownership to Picea

iRobot Corporation, the Bedford, Massachusetts-based consumer robotics company known for the Roomba, filed for chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware on December 14, 2025. The case was a prepackaged restructuring that transferred ownership to its contract manufacturer, with Picea converting claims into 100% of the reorganized equity under the restructuring support agreement. Picea agreed to convert roughly $254 million in claims into equity, and the Confirmation Order shows the plan was confirmed on January 22, 2026 and became effective on January 23, 2026. The transaction leaves iRobot as a privately held company controlled by its largest lender and supplier, with existing equity cancelled and the stock delisted from Nasdaq.

The filing followed the collapse of Amazon's acquisition after regulators signaled opposition in Europe, with Amazon and iRobot terminating the deal in January 2024. Competitive pressure intensified as Chinese rivals expanded their market share, and iRobot's global smart vacuum share fell below 10% by Q1 2025. Tariffs on Vietnam-made products and inflation-driven cost increases squeezed margins, with industry coverage pointing to tariff headwinds and higher operating costs across the supply chain. The First Day Declaration describes a multi-year restructuring effort, including the iRobot Elevate strategy and a 2025 marketing process that failed to produce a buyer before the company turned to a prepackaged plan led by its primary manufacturer.

Prepackaged Restructuring and Ownership Transfer

The restructuring centers on iRobot's manufacturer and largest creditor stepping into ownership. Shenzhen Picea Robotics (also known as 3irobotix) is one of the world's largest original design manufacturers of robot vacuums, with over 7,000 employees globally and R&D and production facilities in China and Vietnam. Industry coverage notes that Picea has manufactured more than 20 million robotic vacuum cleaners and holds more than 1,300 intellectual property rights worldwide.

Picea's influence accelerated in late 2025. In November 2025, Santrum Hong Kong Co., a Picea affiliate, acquired iRobot's first lien credit agreement from Carlyle Group affiliates for approximately $190.6 million in principal and interest. At roughly the same time, iRobot owed Picea about $161.5 million under its supply agreement, including $90.9 million past due. Holding the secured debt and the largest trade claim allowed Picea to dictate restructuring terms.

The Disclosure Statement shows a concentrated capital structure heading into the petition date. The secured term loan and supply agreement claims were both held by Picea affiliates, while the remaining unsecured balance sat with vendors and trade counterparties that were kept unimpaired in the plan. The concentration of secured and supply claims enabled a debt-for-equity outcome without a broader creditor vote.

Under the prepackaged plan, Picea converts $180 million of first lien claims into 95% of the reorganized equity and $74 million of supply agreement claims into the remaining 5%. The Chapter 11 Plan shows that approximately $84 million of supply agreement obligations remain due and payable after emergence, reflecting the portion not converted to equity. The plan leaves general unsecured creditors unimpaired and paid in full, a point emphasized in the company's restructuring announcement.

The plan treatment is summarized below:

The prepackaged structure meant votes were solicited before the petition date, with Picea's affiliate as the only impaired voting class. The court confirmed the plan on January 22, 2026 and entered an effective date on January 23, 2026. With effectiveness, iRobot ceased to be a public company; equity holders received no recovery and the stock was delisted.

Governance changes followed the Plan Supplement. The filing identifies a new board consisting of James Yang Yong, Ada Feng Huiwei, Garry Liao Delin, Robert McCarthy, and Kenneth A. Mendelson, with Robert McCarthy serving on the board of the new U.S. data subsidiary. Management continuity is preserved in the short term, but ownership now rests entirely with Picea.

The restructuring timeline reflects the accelerated prepack cadence:

Plan Mechanics, Releases, and Post-Effective Tasks

The confirmed plan does more than reshuffle ownership. The Modified Plan provides that executory contracts and unexpired leases are deemed assumed on the effective date unless specifically rejected, with cure objections due January 8, 2026. Any rejection claims must be filed within 30 days after the later of the confirmation order approving rejection or the effective date of that rejection. These mechanics are designed to keep the supply chain intact while giving the reorganized company flexibility to exit non-core commitments.

Conditions to effectiveness included satisfaction of restructuring support agreement milestones, entry of a confirmation order acceptable to Picea, funding of a professional fee escrow, adoption of new organizational documents, and receipt of antitrust and foreign investment approvals. The plan supplement also contemplated governance changes and the creation of a U.S.-based data subsidiary, reflecting the regulatory sensitivity around consumer mapping data.

The plan includes customary releases and exculpation provisions, with carve-outs for fraud and willful misconduct. In simplified form:

Because the plan was prepackaged, the disclosure statement and plan were filed at the outset of the case, and the court scheduled a combined disclosure statement and confirmation hearing. Objection deadlines for plan confirmation and for final first day orders were set on a shortened timetable, and the plan supplement supplied governance and data protection details before confirmation. The compressed schedule reduced the period of uncertainty for vendors and customers, aligning the case calendar with the company's liquidity runway.

Post-effective deadlines remain on the calendar. Professional fee applications for pre-effective services are due within 45 days after the effective date, and the court scheduled an omnibus/final fee hearing for March 4, 2026. These steps will finalize the administrative wrap-up of the case even though the plan is already effective.

Cash Collateral and Case Administration

The chapter 11 case was funded through cash collateral rather than debtor-in-possession financing. The Interim Cash Collateral Order shows iRobot entered the case with roughly $15 million of cash on hand and prepetition secured obligations of no less than $184.1 million in principal, plus accrued interest and fees. The interim and final cash collateral orders imposed a 13-week operating budget, with updates every 14 days and variance testing limiting actual disbursements to 120% of the approved forecast.

Budget reporting was equally structured. The Final Cash Collateral Order requires proposed budgets every 14 days by 5:00 p.m. ET on Friday, with the secured party's objection window running through 11:59 p.m. ET the following Wednesday. If no objection is made, the proposed budget becomes the current approved budget automatically, and variance reports are delivered on a biweekly cadence.

The cash collateral framework included replacement liens, a superpriority administrative claim, and a strict default regime. Events of default ranged from termination of the restructuring support agreement to failure to deliver reporting packages. Remedies were available after a seven-day notice period, during which cash collateral use was restricted to the carve-out and business-preservation expenses. The orders also barred use of cash collateral to investigate or prosecute claims against Picea and limited any committee challenge budget to $25,000, reflecting the consensual posture of the prepack.

Adequate protection also included a defined carve-out. The cash collateral orders show professional fees incurred before a trigger notice are effectively uncapped, while post-trigger fees are capped at $1 million, plus up to $50,000 for a chapter 7 trustee if the case were converted. Cash collateral authorization terminates automatically upon the earliest of (i) 30 days after the petition date unless extended by consent, (ii) entry of an order approving non-consensual postpetition financing, (iii) the effective date of the confirmed plan, or (iv) expiration of a remedies notice period following an uncured event of default.

First day relief ensured continuity for employees, customers, and critical vendors:

The cash collateral order also limited litigation against the secured party. The order states that cash collateral cannot be used to investigate or prosecute claims against Picea or its affiliates, and the debtor waived its own challenges to prepetition liens. Any committee investigation was capped at $25,000 and had to be brought by the earlier of 75 days after entry of the interim order or the start of the confirmation hearing. The order further granted Picea first-priority liens on the proceeds of avoidance actions (though not on the claims themselves) and required court approval before funding non-debtor affiliates.

Other orders covered cash management, tax procedures, and insurance continuance. The tax attributes order established a 4.5% substantial shareholder notice threshold (based on 31,911,259 shares outstanding as of December 8, 2025) and imposed advance notice requirements for equity transfers to protect net operating loss carryforwards.

Professional Advisors and Case Infrastructure

The case relied on a standard Delaware restructuring team, with court filings documenting separate retention applications for bankruptcy counsel, local counsel, and financial advisors. Retention orders were entered in early January 2026, formalizing the advisory roster and the claims and noticing infrastructure for the short prepack timeline.

Stretto's claims-agent role is particularly important for creditor communications. As claims and noticing agent, the firm maintains the official claims register, distributes court notices, and coordinates service lists. This function is essential in prepackaged cases where deadlines are compressed and stakeholder notices must be delivered quickly.

Operating Footprint and Prepetition Pressure

iRobot was founded in 1990 by MIT roboticists, and the company launched the Roomba in September 2002, kicking off a consumer robotics category that it led for years. The product became a household staple: more than 50 million Roombas have been sold worldwide, and the company built a global installed base tied to its app and service ecosystem.

The strategic arc shifted after Amazon announced its $1.7 billion acquisition in August 2022. European regulators opened an in-depth review in July 2023, citing potential foreclosure risks in online retail channels, and after 18 months of scrutiny Amazon and iRobot terminated the deal in January 2024. The breakup included a $94 million termination fee paid to iRobot and a plan to cut approximately 350 jobs, while long-term CEO Colin Angle stepped down as CEO and board chair.

Competitive dynamics intensified as Chinese manufacturers scaled. TechCrunch reported that by Q1 2025 iRobot's global smart vacuum share fell below 10%, with Roborock, Ecovacs, Dreame, and Xiaomi collectively holding more than half the market. Picea itself had the capacity footprint to support rapid product cycles, with R&D and production facilities in China and Vietnam and a global manufacturing base serving multiple brands.

Financial results deteriorated across 2024 and 2025. iRobot reported 2024 revenue of $681.8 million, a 23.4% year-over-year decline, with a net loss of $145 million and a going-concern warning. By June 2025, media coverage noted outstanding debt of $203 million and cash of $40.6 million, while total liabilities exceeded $488 million. Industry reporting also tied the downturn to tariffs on Vietnam-made products, which created headwinds of up to 46%, and to inflation-driven increases in freight, vendor, and contract manufacturing costs.

The March 2025 results release also disclosed a strategic review. iRobot's board engaged Canaccord Genuity and BofA Securities to advise on strategic alternatives, an effort that the First Day Declaration describes as evolving into a 2025 marketing process that failed to secure a buyer. That process ended when a potential purchaser withdrew in October 2025, leaving a Picea-led prepack as the remaining path to liquidity.

The First Day Declaration notes that iRobot retains a sizable intellectual property portfolio, including approximately 1,825 U.S. and foreign patents tied to robotics, navigation, and smart home systems. But the company also faced a structural cost challenge: manufacturing concentrated in Vietnam exposed it to tariff risk and supplier price increases, a point reflected in industry coverage of Picea's China and Vietnam production footprint. Retail Dive noted that inflation and higher interest rates strained near-term liquidity, citing the Federal Reserve's eleven rate increases between March 2022 and July 2023, which increased borrowing costs for leveraged issuers.

The First Day Declaration describes a multi-step turnaround effort. The company launched its iRobot Elevate strategy in 2024, initiated a marketing process in early 2025, and entered exclusive talks with a prospective buyer before that party withdrew in October 2025. With liquidity tightening, iRobot negotiated amendments to its credit agreement, then watched as Santrum Hong Kong (Picea's affiliate) purchased the first lien debt in November 2025. By the petition date, the company had little runway and pivoted to a prepackaged plan supported by its largest secured creditor and trade counterparty.

Headcount reductions tracked this arc. After the Amazon deal collapsed, iRobot announced roughly 350 job cuts. The company conducted another round of layoffs in November 2024, trimming 105 additional positions, and by the petition date iRobot reported approximately 274 U.S. employees.

Drivers of Distress and Failed Alternatives

Several documented pressures converged in the run-up to the filing. The most visible was competition. TechCrunch reported that iRobot's global smart vacuum share fell below 10% by Q1 2025, with Chinese rivals expanding across price points and product cycles. This competitive shift compressed pricing power and shortened replacement cycles, undermining the premium positioning that had historically supported iRobot's margins.

Trade policy and cost inflation compounded the problem. NPR highlighted tariffs on Vietnam-made products, and the First Day Declaration estimates that tariff costs would rise by more than $23 million in fiscal 2025. Retail Dive reported that inflation and higher interest rates increased vendor, freight, and contract manufacturing expenses, tightening liquidity as borrowing costs rose. These pressures arrived just as iRobot's revenue base was shrinking and its gross margin was already compressed.

The failed Amazon acquisition removed the most plausible strategic exit. After a prolonged regulatory review, Amazon and iRobot terminated the transaction in January 2024. The resulting workforce reductions and leadership change marked a shift from growth to triage. The First Day Declaration describes a follow-on marketing process in 2025 that failed to yield a buyer, leaving a creditor-led prepack as the viable alternative.

Liquidity and supplier concentration finished the picture. By June 2025, press coverage cited debt of $203 million and cash of $40.6 million, while Picea held both the secured term loan and the largest trade claim. The First Day Declaration notes that iRobot stopped paying under the Picea supply agreement as liquidity tightened, effectively tying the company's turnaround to the willingness of its primary manufacturer and lender to convert claims into equity.

Foreign Ownership and Data Protection

The Plan Supplement addresses data governance concerns tied to foreign ownership. The filing states that iRobot will keep U.S. person data in the United States, restrict foreign access, and establish a new U.S.-based subsidiary to manage U.S. data. The plan also requires an independent, U.S.-based third-party monitor who will serve as iRobot's Data Security Officer and oversee the data protection program. The monitor must be unaffiliated with Picea and empowered to ensure that data is maintained and administered by U.S. persons.

These safeguards are embedded as conditions of the restructuring transactions and will remain in place post-emergence. The Plan Supplement also contemplates new governance documents for the reorganized company, reflecting the shift to private ownership and the need to address regulatory sensitivity around consumer mapping data.

Stakeholder Impact

The prepackaged process emphasized operational continuity. iRobot has said it expects no disruption to its app, customer programs, or product support, and the first day orders authorized continued funding of warranties, returns, and gift card programs. Employee wages and benefits were covered by court-approved authority to pay prepetition amounts and continue ordinary-course benefits. The company did not seek a key employee incentive plan, instead relying on a short restructuring timeline and cash collateral budget discipline.

General unsecured creditors are unimpaired and expected to be paid in full, consistent with the company's December 2025 announcement. Administrative claims are paid in cash at emergence. In contrast, existing shareholders receive no recovery; equity interests were cancelled on the effective date and iRobot's shares were delisted. The outcome illustrates a common prepack pattern in which the secured lender and largest trade counterparty convert their claims into equity while leaving trade creditors whole.

Policy and Industry Reaction

The iRobot case drew pointed commentary about antitrust enforcement and the consequences of the abandoned Amazon transaction. Former CEO and co-founder Colin Angle told CNBC that the bankruptcy outcome was "profoundly disappointing" and "a tragedy for consumers," and argued that regulatory opposition to the Amazon deal was a key contributor to the collapse. He described the filing as avoidable and emphasized the role of the failed acquisition in the company's loss of strategic options. These comments appear alongside broader concerns that U.S. technology assets shifted to foreign ownership after the merger was blocked.

The Information Technology & Innovation Foundation advanced a similar critique. In its analysis, the FTC's September 2022 second request and the European Commission's November 2023 Statement of Objections signaled a regulatory posture that made the transaction untenable. ITIF argued that enforcement choices unintentionally weakened iRobot's competitive position and accelerated the transfer of ownership to a foreign manufacturer. While these policy critiques are outside the four corners of the plan, they frame the bankruptcy as part of a broader debate over antitrust policy, industrial competitiveness, and cross-border ownership of consumer technology firms.

The First Day Declaration and industry reporting add another layer to the discussion: tariffs on Vietnam-made products, higher freight and contract manufacturing costs, and a steady loss of market share to Chinese rivals. These pressures, combined with liquidity constraints and shrinking revenue, created a backdrop in which the company had limited leverage beyond a creditor-led prepackaged deal. The result was a fast, highly structured chapter 11 process that resolved ownership but left unresolved questions about U.S. competitiveness in the consumer robotics sector.

Frequently Asked Questions

When did iRobot file for chapter 11, and was it prepackaged? Yes. iRobot filed a prepackaged chapter 11 plan on December 14, 2025, with plan votes solicited before the petition date.

When was the plan confirmed and when did it become effective? The court confirmed the plan on January 22, 2026, and the plan became effective on January 23, 2026.

Who owns iRobot after chapter 11? Shenzhen Picea Robotics will own 100% of the reorganized company after converting first lien and supply agreement claims into equity.

Are general unsecured creditors impaired? No. General unsecured creditors are unimpaired and paid in full under the plan.

What happens to existing iRobot equity? Existing equity interests were cancelled with no recovery, and the stock was delisted from Nasdaq.

Will Roomba warranties and the iRobot app continue to operate? Yes. iRobot stated that its app and customer programs will continue to operate during and after the restructuring process.

What data protection measures are required under the plan? The plan supplement requires U.S. person data to remain in the United States, shields that data from foreign access, and establishes a U.S.-based data subsidiary with an independent U.S. Data Security Officer.

Who is the claims agent for iRobot Corporation? Stretto, Inc. serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

For comprehensive analysis of consumer products and retail bankruptcies, visit the ElevenFlo bankruptcy blog.