Colt Finally Ready To Exit Bankruptcy

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Hartford, Connecticut gunmaker Colt has won confirmation of its Chapter 11 bankruptcy exit plan. The plan, which includes a new lease on the company’s Hartford plant as well as negotiated terms for retiree medical benefits with the United Auto Worker’s union, was approved by all of the company’s stakeholders. ABLAdvisor reports:

Colt Defense LLC announced that the United States Bankruptcy Court for the District of Delaware (the “Court”) has confirmed the Company’s Second Amended Joint Plan of Reorganization (“the Plan”). The Plan received full support from all of the Company’s stakeholders. Upon completion of the restructuring process, which is expected to occur in the coming weeks, the Plan will significantly restructure and reduce the Company’s debt, improve its capital structure and enhance its liquidity profile. The Company will also have a new lease for its West Hartford Facility and the Plan reaffirms the Company’s strong relationship with the UAW.

The Plan finalizes a global settlement of all outstanding issues in the cases, achieved through a consensus reached among Colt’s key stakeholders, including a consortium of Colt’s secured lenders, Morgan Stanley as the lender under Colt’s pre-petition and post-petition secured term loan facilities, the official committee of unsecured creditors appointed in Colt’s bankruptcy cases, Sciens Capital Management and the landlord at Colt’s West Hartford facility.

In conjunction with the confirmation, Colt also announced that it has reached an agreement with the United Auto Workers Union that resolves issues relating to retiree medical benefits.

“Today we achieved the last important milestone on Colt’s path to emerging from Chapter 11 as a stronger and more competitive company,” said Dennis Veilleux, President and Chief Executive Officer of Colt Defense LLC. Mr. Veilleux added, “We greatly appreciate the dedication and support of our extraordinary employees during this process, as well as the support we received from our financial stakeholders, Sciens Capital and our customers and vendors.”

Perella Weinberg Partners L.P. is acting as financial advisor of the Company, Mackinac Partners LLC is acting as restructuring advisor of the Company and O’Melveny & Myers LLP is the Company’s legal counsel.

Although Colt Defense has been in bankruptcy, it is still producing firearms. According to a recent report, the deal retains all of Colt’s 700 employees, which is welcome news in a time of uncertainty for them. Colt’s financial woes have been the result of parent company Sciens Capital’s mismanagement. Back in May, Hognose of WeaponsMan.com walked his readers through the company’s financial woes:

Colt’s hedgies (several generations of them, currently Sciens Capital) have taken it through multiple unnecessary reorganizations, each time stripping as much cash out of the company as possible, pocketing as much as they can get away with, and leaving it saddled with unsustainable debt. The company has hundreds of millions in debt that it has no reasonable chance of repaying. Now, faced with inability to pay a $10.9 million interest payment owed this month, the company’s managers seek to stave off default with hedge-fund chutzpah: offering investors the “opportunity” to take a 70% haircut on $250M of their bonds, or, alternatively, the company will bang out bankrupt — in a prepackaged bankruptcy modeled on that of the Government Motors rip-off and using the same obscure section of the bankruptcy code. Like the Chrysler and GM  bankruptcies, this plan will preserve the equity of favored creditors — the hedge fund managers — while ruining, or at least haircutting, disfavored creditors — like the bond holders.

We have been covering Colt’s financial struggle since November of last year, beginning with initial signs of Colt’s default, and continuing with the withdrawal of Blackstone Funds’ equity, the Cortland Capital loan, debt restructuring, the news that Colt had mortgaged some of its patents, Colt filing Chapter 11, the possibility of a Native American tribe coming to Colt’s rescue, and Colt’s new joint contract with FN, which Remington subsequently sued them both, and the Army, over.

Though Colt may be emerging from bankruptcy, it’s likely that their problems are not over. We will continue to cover events with the company as they unfold.



Nathaniel F

Nathaniel is a history enthusiast and firearms hobbyist whose primary interest lies in military small arms technological developments beginning with the smokeless powder era. In addition to contributing to The Firearm Blog, he runs 196,800 Revolutions Per Minute, a blog devoted to modern small arms design and theory. He can be reached via email at nathaniel.f@staff.thefirearmblog.com.


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  • Tom – UK

    Just for gigles imagine if the CEO of Keltec was brought in to turn Colt around, innovation splurge!

    • Edeco

      In a way it would be just the thing; bring life into Colt, give Mr Kellgren more capital. But overall I wouldn’t want to see it happen. It would be sad, like hitching a unicorn or a gazelle to a millstone. Kellgren must be wild and free with his own private company.

  • cons2p8ted

    Colt is just crap these days! I just bought a Colt Sporting Lower (made in by Colt Licensee Bold Ideas in Breckenridge, Texas) online over black Friday to mate it to my 6920 upper that I had laying around. The fit and finish was a joke! So much play between the upper and lower that you could probably hide a few illegals in between. I know Colt rarely makes anything themselves these days but when you are the ORIGINAL mil-spec manufacturer, you would think they get their sub-vendor to do it on their prints to mil-spec, especially when that sub-vendor is manufacturing Colt “competition” rifles! No wonder they lost a few major military contracts to FN!

    • Tim Pearce

      I don’t think the military cares much about quality. Lowest bidder gets the contract.

      • Joshua

        No it doesn’t.

        You keep saying that word, but it doesn’t mean what you think it means.

      • USMC03Vet

        Although a commonly used meme it’s hardly true at all if you’ve served. US military uses some very over priced stuff and some very top of the line stuff. It’s certainly not the cheapest that’s for sure.

        • John Smith

          Of course, since the Civil War, they’ve been paying double or more for items that weren’t even worth their ordinary asking prices as well.

    • dumpsterdog

      I don’t think Colt follows the mil specs anymore.

  • Jay

    How come I’m not surprised.
    “bankruptcy protection” is such a farce. There’s no hope for an economy where this kind of travesty is allowed to function.
    The market should work on healthy competition and simple natural selection, not BS like this.
    People shouldn’t be allowed to screw up so many times, like Colt did.
    This looks more like special Olympics.

    • Darhar M.

      It is an insult to the disabled athletes and Special Olympics to compare them to Colt.

  • Lance

    Think the US Army M-4 contract is helping them too.

  • Joshua

    Honestly if colts CEOs weren’t double dipping and putting every bit of profit in their pockets Colt would be fine.

    Colt is in this situation solely due to its owners taking and taking.

  • John

    You know, it doesn’t help when you put up a picture of a man organizing AR-15s and there’s a bunch of Call Of Duty posters on the wall in the background.

    This isn’t Colt getting out of bankruptcy. This is Colt getting approval on their bankruptcy plan. Big difference.

    • nadnerbus

      I think Colt may have had licensing deals with Activision for those Call Of Duty titles. Would make a bit of sense if they did for them to have the posters up.

  • Kyle

    For how long this time? Weren’t they on the verge of bankruptcy barely a decade ago anyway? Hell the only reason they are making it out of bankruptcy is thanks to the Pentagon taking pity on them and giving them the M4 contract. Colt leans way to hard on the idea of “IT IS A COLT” when expecting civvies to buy. I bought a new 1911 recently. I got a nice Ruger SR1911R for about 100$ less than the bone stock generic mil-spec Colt 1911 was going for. Nevermind Colt’s pricing put it in the same category as the mid range Springfield and entry level Sig 1911s which were still nicer than the Colt. Even better the fully loaded Colt which cost more than almost every other 1911 in the case. A pony stamp is not worth that much.

  • dumpsterdog

    UAW? UAW affiliation? No wonder they ended up bankrupt.

    • JK

      It’s the unions! It’s the management! It’s the unions! It’s the management! Where’s that “Why not both?” meme when you need it?

  • Gern Blanston

    get rid of the damn union for freakin sake!, and then move to a gun friendly state!!!!!