Iconic gunmaker Colt is on the brink of bankruptcy

[johncanfield]

Here's an excerpt from a just updated Wall Street Journal article about them:

".....Colt Defense LLC filed for chapter 11 bankruptcy protection Sunday, warning its business is in a fragile state and it needs a quick sale to survive.

The bankruptcy filing was expected for the famed gun maker, which failed to win the support of bondholders for a debt-reshaping agreement. Colt had said if it couldn’t reach a deal, it would put itself up for sale in bankruptcy.

Papers filed in the U.S. Bankruptcy Court in Wilmington, Del., estimate the company’s debts and assets are both in the $100 million to $500 million range. Liabilities include more than $100 million in top-ranking secured debt and the $250 million bond debt.

Colt is racing to get to the auction block by Aug. 3, with an opening buyout offer from Sciens Capital Management LLC, Colt’s private-equity backer.

In court papers, Colt said it can’t afford a long court fight with bondholders, and could have to liquidate if the chapter 11 proceeding becomes a long, litigious bankruptcy......"

[Glockster]

And in this USA Today (http://www.usatoday.com/story/money/bus ... /71228058/" onclick="window.open(this.href);return false;) it also says:
"A firm, Sciens Capital Management, plans to buy virtually all of Colt's assets."

[karder]

I hate to see an iconic company like Colt in the situation they are in. The very first gun I bought for myself was a Colt Commander the day I was old enough. As others have already stated, they have made their own bed through mismanagement and not listening to customers. Hopefully bankruptcy will put them in the hands of management who treasures the Colt brand and makes them competitive again.

[surprise_i'm_armed]

Great...Colt got into trouble by being managed by bean counters, so their rescue
has now been done by more "asset management" types rather than a real gun company. Sheesh.

SIA

[RoyGBiv]

The following is my opinion.

To me this looks like a case where a manufacturer has concocted a way to use the bankruptcy process to leave behind their debts and obligations. And maybe even their union contracts (That remains to be seen).

Their unsecured creditors and suppliers suffer the bulk of the financial burden.

All of that MIGHT be palatable (not really), if it were not for the fact that Sciens Capital management is putting back into place some of the very same managers that are largely responsible for the financial trouble that Colt now finds itself in. Brilliant.

So... we'll be seeing this story again in 5-7 years. Rinse. Repeat.

Colt Defense Announces Fast Track Restructuring

I certainly do not have the inside scoop on this.. but as an outside observer, this looks (my personal opinion, nothing more) like a case where former Colt management has lived large on the backs of it's suppliers and possibly its employees (are pensions currently underfunded?), and now they're flushing away the debt and starting over. I would love to see some data that says I'm wrong. Certainly possible.

I'm open to another scenario to explain how one of the most well respected brands in the firearms industry managed to bankrupt itself during one of the highest sales volume periods their industry has ever seen.

[ELB]

The following is my opinion.

...
I certainly do not have the inside scoop on this.. but as an outside observer, this looks (my personal opinion, nothing more) like a case where former Colt management has lived large on the backs of it's suppliers and possibly its employees (are pensions currently underfunded?), and now they're flushing away the debt and starting over. .

As I mentioned earlier, the guy who blogs at Weaponsman.com has published a detailed look into this, and I think he says pretty much what you are saying. Money was pulled out of the company to pay management and consultants, and not put back into new products and manufacturing. Even the building is owned separately by Sciens people and leased back to the Colt company...and the Colt name and patents have already been mortgaged to provide money, so there's really not much left of value.

Some more here: http://weaponsman.com/?p=23383" onclick="window.open(this.href);return false;

[VMI77]

The following is my opinion.

...
I certainly do not have the inside scoop on this.. but as an outside observer, this looks (my personal opinion, nothing more) like a case where former Colt management has lived large on the backs of it's suppliers and possibly its employees (are pensions currently underfunded?), and now they're flushing away the debt and starting over. .

As I mentioned earlier, the guy who blogs at Weaponsman.com has published a detailed look into this, and I think he says pretty much what you are saying. Money was pulled out of the company to pay management and consultants, and not put back into new products and manufacturing. Even the building is owned separately by Sciens people and leased back to the Colt company...and the Colt name and patents have already been mortgaged to provide money, so there's really not much left of value.

Some more here: http://weaponsman.com/?p=23383" onclick="window.open(this.href);return false;

I'd say calling what they did pulling money out to pay management and consultants is very generous. I'd say it was more along the lines of taking over a company for the primary purpose of looting its corpse. Legalized thievery.

[ghostrider]

So... we'll be seeing this story again in 5-7 years. Rinse. Repeat.

we've already seen it before:

http://articles.latimes.com/1992-03-20/ ... _gun-sales" onclick="window.open(this.href);return false;
http://articles.courant.com/1992-03-20/ ... industries" onclick="window.open(this.href);return false;

[winters]

Being a 1911 type of guy I never saw anything great about colts 1911's. They are all run of the mill average to me. Their is so many more better built 1911's then colts. I know people will say its not a 1911 unless its a colt but other companies have a much better product.

[WildBill]

Being a 1911 type of guy I never saw anything great about colts 1911's. They are all run of the mill average to me. Their is so many more better built 1911's then colts. I know people will say its not a 1911 unless its a colt but other companies have a much better product.

That is the point. During their best period, Colt built the best quality handguns on the market. Since then, their quality has not kept up with the competition.

[enforcerjwd]

If they go bankrupt... should I stock up on the older colt 1911's? Would the prices start increasing over the years?

[SA_Steve]

Be that as it may, I just purchased a new series 80-style (yes, I know) Colt 1911 last night - probably because I'm 50 years old now and have never owned a Colt and it's about time before I die.

I'm going to be removing the offending fire-control parts and replacing the long plastic trigger with a John Harrison medium-length trigger.

Hey, no talk about dying. I'm 67.
I had a Colt Commander, enjoyed carrying it, playing with it, and upgrading most all the parts. Sill, I never could shoot it even close to accurately. Spent a lot of time and money on it trying to fix it, unfortunately It was me, not the gun.
Happy when I traded it off, some things are just not meant to be.

[joe817]

Here we go. Try this on for size.

IF Colt does go belly up and the courts order liquidation, I think that someone will buy the trade name Colt and start manufacturing 1911's all over again. And I think the company who will buy the name will be Armscor.

[JSThane]

Here we go. Try this on for size.

IF Colt does go belly up and the courts order liquidation, I think that someone will buy the trade name Colt and start manufacturing 1911's all over again. And I think the company who will buy the name will be Armscor.

I'll do ya one worse. Taurus. Imagine one of their revolvers with a prancing pony on the side...