Renowned gun maker Colt may have fallen on hard times in 2015, but the company announced this week that it expects to emerge from Chapter 11 Bankruptcy by the end of the year.
In a press release on Wednesday, Colt announced that the US Bankruptcy Court for the District of Delaware approved the company’s plan of reorganization, which includes massive changes for the company that will “improve its capital structure and enhance its liquidity profile” along with reducing its debt. Colt originally filed for Chapter 11 bankruptcy protection in June after it was no longer able to pay its creditors. Earlier in 2014, Colt dodged a potential default by securing a $70 million load with a Morgan Stanely affiliate.
“Today we achieved the last important milestone on Colt’s path to emerging from Chapter 11 as a stronger and more competitive company,” said Dennis Veilleux, resident and CEO of Colt Defense LLC. “We greatly appreciate the dedication and support of our extraordinary employees during this process, as well as the support we received from our financial stakeholders, Sciens Capital and our customers and vendors.”
According to the Hartford Courant, Colt owed $269 million in unsecured debt to its 30 largest creditors when it filed for bankruptcy protection in June, the most important of which was a group of bondholders who loaned the gun maker $250 million in 2009. Once the company leaves bankruptcy, some of those bondholders will become partial owners in Colt and feed $30 million to the $50 million recapitalization fund the gun maker is expected to have.
On Thursday, Colt and the United Auto Workers Union (UAW) also announced that they have come to an agreement that resolved issues related to retiree medical benefits, allowing the gun maker to move forward with its plan of reorganization. The union said it will be asking the Connecticut government to lend Colt $10 million for product development and for the lease at the company’s West Hartford Facility.
“UAW members at Colt have been the foundation of our Union’s historical role in Connecticut’s manufacturing base. We will do everything in our power to see that these good jobs continue for generations to come,” said Julie Kushner, Director of UAW Region 9A.
The last time Colt exited bankruptcy was in 1994.