Colt Defense, one of America’s best-known makers of guns, has filed for bankruptcy protection, the company announced Sunday night.
The company is hoping for an accelerated sale of its operations in the US and Canada. Sciens Capital Management, an investor which owns about 87% of the company , has agreed to act as a “stalking horse bidder” and purchase its assets and assume its liabilities. Colt hopes the entire process will take 60 to 90 days.
“The plan we are announcing and have filed today will allow Colt to restructure its balance sheet while meeting all of its obligations to customers, vendors, suppliers and employees and providing for maximum continuity in the Company’s current and future business operations,” said Keith Maib, chief restructuring officer of Colt Defense.
According to the press release , the company plans to continue its normal business operations and plans to follow through on all union-related agreements with its employees, who it expects will be paid all wages, salaries and benefits.
“Colt remains open for business and our team will continue to be sharply focused on delivering for our customers and being a good commercial partner to our vendors and suppliers,” said Maib.
The gunmaker has been struggling financially for some time and, according to CNN Money , missed a $10.9m interest payment on its debt in mid-May. Over the past few months, the company has tried to get its creditors to agree on restructuring-plan, but had been able to gain support from just 5.9% of its bondholders.
“While entering Chapter 11 protection in the absence of consensual agreement with our note holders was not our preference and we do not take it lightly, we are confident it is the best path going forward,” said Maib.
This is not Colt’s first brush with bankruptcy; the company previously come back from a Chapter 11 bankruptcy in 1994.
Its current troubles are in part due to the fact that Colt lost out on the M4 US army contract to FN Herstal in 2013. Additionally, despite increase in support of gun rights , number of US households that owned guns has dropped to a 40-year low in 2014 . Last year, 32% U.S. households owned guns compared to 54% in 1977.
The company was founded in 1855, when Sam Colt opened his first factory near Hartford, Connecticut and incorporated it as Colt’s Patent Fire Arms Manufacturing Company. Within one year, Colt was producing 150 weapons a day and soon became America’s legendary gunmaker. Its post-Civil War slogan is: “Abe Lincoln may have freed all men, but Sam Colt made them equal”.
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