Matt Jarzemsky of the Wall Street Journal reports that Colt Defense LLC will go into bankruptcy tomorrow.
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.According to the article, Sciens Management LLC owns 87% of Colt Defense. Moreover, some of the principals of that firm have ownership stakes in Colt's West Hartford, CT plant. The lease on that plant comes up for renewal in October.
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.
Colt will be relying on a bankruptcy court-ordered auction of business assets to help pay down its $355 million in debt. The primary assets that they own are their intellectual property (patents) and their trademark. It is my understanding that these have been heavily mortgaged already.
For a great historical perspective on the origins of Colt's problems, see this post in the Weaponsman blog by "Hognose".
I will be checking Pacer tomorrow to see what I can glean from the bankruptcy filing.