Bankruptcy, Liability Management, and Credit Message Board

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Strategies & Market Trends : Bankruptcy, Liability Management, and Credit

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From: Sean Collett	12/15/2025 11:28:46 AM
	of 4

iRobot ($iRBT) On Sunday evening iRobot announced that it would be filing prepacked Chapter 11 bankruptcy. The company posted $681.84M of revenue in 2024 with an EBITDA of ($81.28M) and negative FCF of ($175.70M) and core cash flow of ($209.38M). The prepack is expected to be confirmed within the next 45 days. As I wrote in the QVC thread a prepack typically moved pretty fast and this one is a confirmation of that. I wrote this about Prepacks on the QVC thread I linked to: " Now as for timing, my view is we would see some news in a few weeks. Company is already spending on two firms and likely reimbursing on four others + $100K a month spend on Roger and Carol. Cash burn here is indeed real and the company itself burned $156M in six months alone. Just comes down to which situation we see unfolding LME, prepack, or freefall. If they can get a prepack done that usually takes 45-60 days and without factoring holiday's in we're at 55 business days right now since the May 28th reports." Since 2019 EBITDA growth has compounded at -191.93% and revenue growth has compounded at -10.90%. Rather alarming decline. The number seems big and EBITDA can swing but I find the decline to be alarming. In 2022 iRobot and Amazon entered into an agreement for Amazon to buy the company but this was eventually blocked by the FTC. There were many hoping this one would play out but it was always a call option on the company getting another lifeline. The lifeline this time comes from the courts. The company will be taken over by its main supplier with 100% of the common equity going to them - existing equity is "cancelled and extinguished" and current holders will get zero recovery. If we assume a distressed multiple of 6x (beyond generous) and EBITDA were to continue a compound decline of -1% for next five years and share count compounded at 1% in that same period then using a discount rate of 15% I have the fair value somewhere closer to ($9.84/s) for the equity. When you get a valuation output with a negative value just take it to mean there is no residual value in the company which is why we see the equity cleaned out. Prepacked cases are pretty straight forward as everything was negotiated well in advanced to help bring bankruptcy costs down. Disappointing outcome for those in the US but given the revenue trajectory with no clear path to rebound it was not unexpected. -Sean

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