iRobot Files for Bankruptcy as Competition and Debt Take Toll

For over two decades, iRobot’s Roomba was a symbol of futuristic living, a small robot quietly cleaning homes. This redefined what consumer robotics could be. Founded by scientists from the Massachusetts Institute of Technology , iRobot was once among the most admired American hardware innovators. That long-running success story, however, has now entered a difficult new chapter. On Sunday, the 35-year-old company filed for Chapter 11 bankruptcy protection in a Delaware court, saying it would restructure its business and go private after being acquired by its primary contract manufacturer, China-based Picea Robotics. Once the court-supervised process is completed, expected by February 2026, iRobot will delist from Nasdaq and operate as a privately held company. All existing common shares will be cancelled, leaving shareholders with no recovery. iRobot was founded in 1990 and initially focused on defence and space-related projects. Its turning point came in 2002 with the launch of the Roomba robotic vacuum cleaner. The product was an instant hit and helped turn iRobot into a household name. Over the years, the company sold more than 50 million robots globally and built a strong presence in key markets. Even today, iRobot controls around 42 percent of the US robotic vacuum market and about 65 percent of the Japanese market, as reported by Reuters. The company went public in 2005 and reached its peak valuation during the pandemic, when stay-at-home demand pushed iRobot’s market value to about $3.56 billion in 2021. At that point, the future of smart home robotics seemed firmly in its grasp. The problems began as competition in the robotic vacuum space increased. Chinese manufacturers such as Ecovacs Robotics entered global markets with cheaper alternatives that offered similar features. To defend its market share, iRobot was forced to cut prices and also spending heavily on research, software, and product upgrades. Though sales volumes held up, profit margins shrank steadily. In 2024, iRobot generated roughly $682 million in revenue, but the company remained loss-making. Regardless of its dominance in the US and Japan, it struggled to compete in a market where consumers increasingly prioritised price over brand loyalty. US trade policy under the Trump administration further weakened iRobot’s position. The company manufactures most of its vacuum cleaners in Vietnam for the US market, and new US tariffs proved costly. A 46 percent levy on Vietnamese imports added an estimated $23 million to iRobot’s costs in 2025 alone, according to court filings. The company said the tariffs not only hurt margins but also made it difficult to plan for the future, adding uncertainty at a time when finances were already under strain. iRobot’s fortunes appeared set to change in 2022, when Amazon announced plans to acquire the company in a deal valued at about $1.4 to $1.7 billion. The acquisition promised stability, fresh investment, and integration into the smart home ecosystem. However, the deal ran into regulatory resistance, particularly from European Union competition authorities, who raised concerns about market dominance. After months of uncertainty, Amazon abandoned the acquisition in January 2024, paying iRobot a $94 million termination fee. By then, the prolonged limbo had already taken a heavy toll on the company’s finances and morale. While waiting for the Amazon deal to close, iRobot had taken on a $190 million loan in 2023 to refinance its operations. When the acquisition fell apart, the company struggled to service the debt. iRobot soon fell behind on payments to Picea Robotics, its long-time manufacturing partner. Picea later acquired iRobot’s debt from funds managed by the Carlyle Group, effectively becoming both its main supplier and largest creditor. By the time iRobot filed for bankruptcy, it owed around $190 million from the 2023 loan and an additional $74 million under manufacturing agreements. The collapse of the Amazon deal also led to internal changes. iRobot cut about 31 percent of its workforce, founder and CEO Colin Angle stepped down, and Gary Cohen took over as chief executive to steer the company through restructuring. Under the restructuring plan, Picea Robotics will take full ownership of iRobot, cancelling approximately $264 million in debt. Other creditors and suppliers are expected to be paid in full. The company said the bankruptcy process will not disrupt its products, mobile apps, customer support, global partnerships, or supply chain relationships. Court filings estimate iRobot’s assets and liabilities at between $100 million and $500 million. The company, headquartered in Bedford, Massachusetts, currently employs about 274 people. Once the restructuring is completed, iRobot will operate as a private company wholly owned by Picea and will no longer be listed on the stock market.