Colt Seeks August Auction After Bankruptcy Filing

By Bob Owens

Colt is going through bankruptcy… again.

Colt Defense LLC filed for chapter 11 bankruptcy protection Sunday, warning its business is in a fragile state and it needs a quick sale to survive.

The bankruptcy filing was expected for the famed gun maker, which failed to win the support of bondholders for a debt-reshaping agreement. Colt had said if it couldn’t reach a deal, it would put itself up for sale in bankruptcy.

Papers filed in the U.S. Bankruptcy Court in Wilmington, Del., estimate the company’s debts and assets are both in the $100 million to $500 million range. Liabilities include more than $100 million in top-ranking secured debt and the $250 million bond debt.

Colt is racing to get to the auction block by Aug. 3, with an opening buyout offer from Sciens Capital Management LLC, Colt’s private-equity backer.

In court papers, Colt said it can’t afford a long court fight with bondholders, and could have to liquidate if the chapter 11 proceeding becomes a long, litigious bankruptcy.

The history of business is replete with stories of companies that hit upon a successful idea or product, rose to the top of their markets, stagnated, and then collapsed into irrelevancy.

Colt hasn’t innovated in years, and coasted …read more

Source:: Bearing Arms