Consumer tech pioneer's Chapter 11 bankruptcy impacts milllions of customers

The 35-year-old company behind the robotic vacuum Roomba, iRobot (IRBT), has filed for a pre-packaged Chapter 11 bankruptcy, prompting worry among millions of loyal customers that they're time-saving house cleaner will soon become "a brick."Since the first Roomba launched in 2022, iRobot has sold over 50 million of its vacuum cleaning robots. Its robots perform nearly 25 million missions per year, and as of 2023, the company boasted 19 million app users, suggesting many vacuums remain in use. The company's bankruptcy filing wasn't surprising, given that iRobot's been struggling with losses since regulators blocked Amazon's planned $1.7 billion acquisition in 2024. Problems accelerated earlier this year when President Trump's tariff policies were enacted, creating a tariff headwind of up to 46% on imports from Vietnam, where iRobot vacuums are manufactured.The bankruptcy won't be the end of the popular Roomba brand, though. The company's biggest contract manufacturer, Picea, is acquiring iRobot through a court-supervised process via a restructuring support agreement.Here's what's likely next for iRobot, its investors, employees, and customers.Roomba gets hit by stiff competitioniRobot was founded in 1990 by MIT students Colin Angle and Helen Greiner, along with Rodney Brooks, the head of the MIT AI Lab, as the company IS Robotics. iRobot filed for Chapter 11 bankruptcy on December 14, 2025. The founders' first major breakthrough was Ghengis, a six-legged walking robot designed for use by NASA. iRobot robotic breakthroughs timeline:1991: Ghengis, for space use.1996: Ariel, designed to detect underwater mines in the surf zone (it could even operate upside down)1998: PackBot, a DARPA-funded, rugged robot designed to dispose of IEDs.2002: Roomba, partially funded in the early going by S.C. Johnson, with early versions named "DustPuppy." Source: iRobot When Roomba launched for the holiday shopping season in 2002, it was considered a leap forward in consumer technology. Many believed that its release would usher in a new era of robotic helpers, not only for households, but for governments eager to explore robotics in Defense and new applications, such as space.However, many were unsure if Roomba would sell, arguing that vacuuming wasn't that difficult and pointing out that Roomba used a random bounce algorithm rather than being able to move based on mapping a room, suggesting it would prove ineffective at the task.More Bankruptcy:Luxury retail chain files Chapter 11 bankruptcyAirline cancels all flights in bankruptcy, passengers strandedPopular fashion retailer files for Chapter 11 bankruptcyMajor sports gambling company files for Chapter 11 bankruptcyNevertheless, it became an instant hit, selling 150,000 units in its first year and inspiring a skit on Saturday Night Live featuring the "Woomba" in 2005, the same year iRobot became a publicly traded company on the New York Stock Exchange, opening at $24 per share, raising $70 million, and trading under the IRBT symbol.Over the years, iRobot sales grew steadily as it launched smarter versions of Roomba and other complementary products, including wet mops, rising from $142 million in 2005 to over $1.4 billion in 2020. iRobot revenue over time:2005: $142 million2010: $401 million2015: $617 million2020: $1.43 billion.2024: $682 million. Source: iRobot SEC filings. More recently, however, the company's sales have struggled as cheaper Chinese versions, which use LiDAR (Light Detection and Ranging) rather than cameras, have eroded its global market share, particularly vacuums made by SharkNinja and Roborock.As a result, iRobot's U.S. robotic vacuum market share has fallen to 42% from 75% in 2020, while the market share in Europe has decreased to 12% from 35%. Worldwide, Roborock displaced Roomba as the market share leader for premium robotic vacuums costing $500 and up, while SharkNinja has eroded demand in the market for lower cost models. Ecovacs is the leading entry-to-mid-tier player in Europe and Asia. iRobot, Amazon breakup sparks layoffs, cost cutsIn 2002, iRobot made a move to potentially sidestep competitive risks, agreeing to be acquired by Amazon for $1.7 billion, or $61 per share. Amazon was interested in acquiring iRobot to combine it with its other 'smart home' products and accelerate its robotics team.At the time, iRobot CEO Colin Angle wrote:Amazon's goals for iRobot included:Leveraging insight about consumers' homes from iRobot to target product advertising to households more effectively.Developing more effective robotic products for homes following its ill-fated Astro.Integrating vacuums alongside other smart home products, including Alexa and Ring, to create a home that could more intelligently serve owners.That deal fell apart, however, after regulators at the FTC in the U.S. and in Europe raised concerns that Amazon would use its e-commerce weight to effectively monopolize the robotic vacuum market.Afterwards, iRobot was faced with a real dilemma. The distraction of the acquisition contributed to rivals gaining ground and contributed to financial woes. After the acquisition was scuttled, iRobot laid off 350 workers, roughly one-third of its employees, in a bid to cut expenses by $100 million. CEO and founder, Colin Angle, also stepped down. Instead, the company finished 2024 with only 541 employees, or 51% of the workers employed at the end of 2023. The strategy was part of a move toward making the company asset-light, shifting expensive roles overseas and to its contract supply manufacturer, Picea Robotics.What's next for iRobot customers, workers, and employeesThe decision to file for Chapter 11 follows management's decision in March 2025 to explore strategic options when iRobot released disappointing 2024 financials showing revenue of $682 million, down 23% year over year, and a net loss of $145 million.The company also included "substantial doubt of remaining a going concern" language in its quarterly 10-K filing with the SEC.The news shook investors, causing a 35% single-day drop in its shares, pushing the company's price below $10.Despite launching the high-end Roomba Max 705 in April to try to regain market share, sales continued to struggle, and losses worsened, partly due to an additional $23 million in costs resulting from the newly instituted tariffs. In the third quarter, iRobot reported sales of $146 million and a net loss of $21.5 million. The company's cash and equivalents had sunk to $24.8 million.Unable to secure a better deal and with cash dwindling, iRobot filed a pre-packaged Chapter 11 bankruptcy on December 14. As part of that filing, it also disclosed that its business will remain a going concern under new ownership, with supplier Picea taking over the company in exchange for forgiving millions in owed payments.According to iRobot's bankruptcy filings, it owed Picea $161.5 million for manufacturing robots, with $90 million of the amount overdue. In November, Picea acquired a $200 million loan made by Carlyle Group to iRobot during the Amazon debacle, with $190 million remaining outstanding.Picea has agreed to cancel $74 million in manufacturing debt as part of iRobot's restructuring, as well as the $190 million owed under the former Carlyle loan. Overall, they secured 100% of iRobot in exchange for forgiving $264 million in debt.The moves enable Picea to gain control over iRobot; however, it does so at the expense of private investors. Stock speculators bid iRobot's shares up from $1.40 in late November to as high as $5.68 on November 12, before the bankruptcy announcement was made. As a result, the sale to Picea erased $137 million in iRobot's market cap.The pre-packaged deal ensures that consumers will experience no disruption in service or product availability, and the app should continue to function without interruption. All vendors and employees are expected to be paid as they would normally. The bankruptcy court approved a motion to pay workers $2,969,516 in expected wages and benefits through the transition.The court order does, however, give Picea the ability to make worker changes."Debtors are authorized to modify, change, and discontinue any of their Compensation and Benefits Programs and to implement new programs, policies, and benefits in the ordinary course during these chapter 11 cases in the Debtors’ sole discretion and without the need for further Court approval, subject to applicable law," reads the bankruptcy court order.iRobot is expected to reemerge as a privately-owned company in February 2026. iRobot bankruptcy facts to know:iRobot has declared bankruptcy via a pre-packaged Chapter 11 bankruptcy filed in Delaware.iRobot will transition to a private company owned by Picea. Shareholders of IRBT stock are expected to get no compensation. iRobot will continue to remain in business. Products will be available, and the app will continue to function. iRobot has secured a court order to pay worker wages and benefits. The company has not yet disclosed if there will be layoffs. Related: 112-year-old furniture chain closes long-time store location