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Colt Defense Receives Default Grade After Ultimatum to Creditors

Colt Defense LLC’s debt rating has been cut to the lowest level possible after the hand-gun maker skipped an interest payment and extended its deadline for creditors to approve either a debt exchange or a prepackaged bankruptcy.

Standard & Poor’s reduced Colt’s rating two grades to D from CC, according to a statement Tuesday from the credit grader. The new rating means S&P considers the company “in default or in breach of an imputed promise” and that it has ruled out the possibility the manufacturer will make good on a missed interest payment during a 30-day grace period.