Colt Defense LLC, the 179-year-old gunmaker that supplies M4 carbines and M16 rifles for the U.S. and foreign militaries, filed for bankruptcy amid delayed government sales and declining demand.
The West Hartford, Connecticut-based firearms maker listed assets of as much as $500 million and debt of as much as $500 million in a Chapter 11 filing late Sunday in bankruptcy court in Wilmington, Delaware. Wilmington Trust Company is listed as the biggest unsecured creditor with a $261 million claim.
Colt’s current sponsor Sciens Capital Management LLC has agreed to act as a stalking horse bidder for all of its assets and liabilities related to existing agreements, according to a statement from the gunmaker. Existing secured lenders have agreed, subject to court approval, to provide a $20 million debtor-in-possession credit facility, Colt said. The current management team will remain in place.
“Colt remains open for business,” Chief Restructuring Officer Keith Maib said in the statement. The plan will allow the company to restructure its balance sheet, he said.
Changing demand for its sporting rifles and commercial handguns, along with delays in anticipated U.S. government and foreign sales, have hurt business, the company said in an earlier regulatory filing.
Colt has struggled since at least November, when it took out a $70 million rescue loan from Morgan Stanley to make an interest payment.
Colt tried to restructure out of court, announcing in April an exchange offer for its senior notes. That expired on June 12 without its conditions being satisfied.
The gunmaker’s business has stumbled before. In 1842, after eight years of operation, sales were sluggish and the first plant, in New Jersey, closed. Samuel Colt designed a more powerful revolver, the Walker, and opened new plants and went on to become one of the 10 wealthiest businessmen in the U.S., according to the company’s website.
Colt died in 1862 at 47. Armsmear, his home, still stands in Hartford and is a national historic landmark.
The case is in re Colt Defense LLC, 15-11287, U.S. Bankruptcy Court, District of Delaware (Wilmington).