Colt Defense, the famous American gun manufacturer, has officially filed for Chapter 11 bankruptcy protection.
The Connecticut-based company announced the move on Sunday. Colt, which has supplied the US military, law enforcement officers, and the gun-owning public with high-quality firearms for over a century (albeit under different names), aims to rapidly sell its assets in the United States and Canada.
“Colt’s current sponsor, Sciens Capital Management LLC (‘Sciens’), has agreed to act as a ‘stalking horse bidder’ and has proposed to purchase substantially all of Colt’s assets and assume secured liabilities and all liabilities related to existing agreements with employees, customers, vendors, and trade creditors,” stated a press release put out by the company detailing the filing.
The announcement of the bankruptcy is a blunt acknowledgment that Colt can no longer afford to pay its creditors, and must now undergo significant financial and corporate restructuring. The company’s money woes first made the news in late 2014, when it dodged a potential default and then announced that it may not be able to make a $10.9 million loan repayment later in 2015.
The company stated that the bankruptcy process, which it predicts will last 60 to 90 days, should not impact “customers, vendors, suppliers, and employees.”
“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,” stated Keith Maib, Colt Defense’s chief restructuring officer.
When word of the company’s financial problems made the news, many speculated as to whether Colt would survive 2015. Though the manufacturer supplied select-fire versions of the AR-15 rifle to the United States Armed Forces for quite some time, it began losing US military market share to companies like FN Herstal in the early 1990s. Increasing competition in the commercial firearms market over the past several years also hurt Colt, as hundreds of companies began offering their own cheaper versions of 1911 pistols and semiautomatic AR rifles and pistols.