According to court documents, A.D.K. Arms, Inc. filed for Chapter 11 bankruptcy on July 20 of this year. This filing was made at the U.S. Bankruptcy Court, Northern District of Illinois.

A.D.K. Arms sells a range of firearms products centered on the AR-10 and AR-15 platforms. It is an affiliate company of Advanced Precision Manufacturing, Inc. (APMI.) As explained in the court documents, A.D.K. Arms serves as a “go-between for customers and APMI.” In short, A.D.K. Arms takes the orders, purchases the products from APMI and then ships the parts out to customers.

In June, APMI filed for Chapter 11 bankruptcy.

According to filings made by A.D.K. Arms, the company has assets and liabilities that are both in the range of $100,001 – $500,000. APMI listed assets and liabilities that were both in the $1 million – $10 million range.

While the facts appear to be in dispute, it appears both bankruptcy filings were prompted by actions taken by Midwest Community Bank (MCB.) According to court documents APMI purportedly owes MCB about $3.9 million. Additionally, A.D.K. Arms purportedly owes more than $1.8 million.

According to the court documents, it appears that APMI and then A.D.K. Arms both filed for Chapter 11 due to the efforts of MCB to collect on those loans. A related case was filed by A.D.K. Arms on July 24 against MCB related to these activities.

So, what does all of this mean for the average shooter?

Chapter 11 bankruptcy is a legal process by which a company can reorganize its business to address its debts and continue operations. A Chapter 11 bankruptcy proceeding does not result in the ending of a business – just a restructuring of the business with the intent that it can get back on track and become profitable again. I have no information, nor am I suggesting, that A.D.K. Arms is “going out of business.”

Rather, both APMI and A.D.K. Arms have stated in court documents that there are multiple paths to exiting Chapter 11 and repaying creditors with a plan of reorganization.

While Chapter 11 is not a great position to be in, it can be used by a company to restructure and jump start the business. Chapter 11 can also be a good way for a company to seek court protection from an aggressive creditor. Personally, I wish both APMI and A.D.K. Arms good fortune during this process.