Gun maker Colt Defense LLC plans to file for chapter 11 bankruptcy-court protection by Monday, according to people familiar with the matter, amid business-execution issues and a heavy debt burden.
The company has secured financing from its existing senior lenders to continue operating while in bankruptcy and expects to remain in business after the restructuring, the people said.
The West Hartford, Conn., company, with a legacy dating to 17th century New England, developed a pistol it calls “the gun that won the West” and enjoyed a lucrative stretch in the late 1990s and early 2000s as supplier to the U.S. military of the M4 line of firearms widely used by front-line troops.
But Colt has struggled in recent years with supply-chain and working capital issues, a slowdown in rifle sales and its 2013 loss of a key contract to supply the U.S. Army with the M4. As a result of some of its operational issues, the company has had accounting problems that caused it to revise prior years’ reported financial results and miss a creditor’s initial filing deadline for an annual report, according to regulatory filings.
Colt plans to try to reduce its $355 million debt burden via a court-supervised auction of its business, to generate proceeds to repay some of its lenders, the people familiar with the plans said.
… Article by Matt Jarzemsky @WSJ