iRobot Corp., the manufacturer of consumer robots, has officially filed for Chapter 11 bankruptcy in the District of Delaware on December 14. This move follows a strategic restructuring support agreement that will result in control of the Massachusetts-based company being transferred to Shenzhen PICEA Robotics Co., its primary supplier and lender, and Santrum Hong Kong Co.

Under the terms of the proposed Chapter 11 plan, Shenzhen PICEA Robotics, a vacuum cleaner maker, is slated to receive the entire equity stake in the reorganized iRobot. Consequently, the company’s existing common stock will be entirely wiped out. Despite this significant change in ownership, iRobot has affirmed that the plan is designed to ensure the debtor continues as a going concern, fulfilling its commitments to employees and making timely, full payments to vendors and other creditors throughout the court-supervised process.

iRobot Chief Executive Officer Gary Cohen stated that “Today’s announcement marks a pivotal milestone in securing iRobot’s long-term future.” This bankruptcy filing comes after iRobot issued a warning in December about potential bankruptcy, stemming from several years of declining earnings. Prior to the filing, Shenzhen PICEA had acquired a substantial portion of iRobot’s debt from US investor Carlyle Group Inc., with iRobot actively engaged in discussions to secure new capital and address its outstanding debt obligations.

Founded in 1990 by three MIT engineers, iRobot has a history spanning over three decades, during which it achieved considerable early success, selling more than 50 million robots according to its website. However, the company’s earnings began to decline significantly since 2021, primarily due to global supply chain headwinds and intensifying competition in the consumer robotics market. A major setback occurred in 2023 when a highly anticipated acquisition by Amazon.com ultimately collapsed due to regulatory concerns. This bankruptcy filing represents a critical step in iRobot’s efforts to stabilize its operations and define a new path forward amidst these challenges.