Can Chapter 11 Bankruptcy Save Colt Defense?

Posted on June 26, 2015 at 12:00pm by

Colt Defense, perhaps the most famous gun company in American history, has recently filed for Chapter 11 bankruptcy. The company was founded in 1855, and its guns have seen action in both sides of the Civil War, World War I, World War II and other historical American conflicts. Cowboys in the Western frontier and mobsters like Al Capone even made use of Colt firearms.

Colt Defense is currently $355 million in debt, and the company sees Chapter 11 bankruptcy as the best option for paying back creditors and keeping its business open. This is not the first time Colt Defense has filed for Chapter 11 bankruptcy. In 1994, the company was able to reemerge as a leading manufacturer of firearms after filing for Chapter 11 bankruptcy.

Sciens Capital Management has made an offer to buy all of Colt’s assets and liabilities, allowing it to make a quick sell so it can begin to rebuild the company and resume operations. Colt Defense expects it will exit bankruptcy within 90 days, but warns if Chapter 11 bankruptcy fails to save the company, that it will seek Chapter 7 liquidation.

If Sciens Capital Management maintains control of Colt Defense and the Chapter 11 bankruptcy is successful, the company will continue to manufacture firearms in West Hartford, Connecticut.

Can Businesses Avoid Shutting Down By Filing For Chapter 11 Bankruptcy?

As we have seen in the example of Colt Defense, filing for Chapter 11 bankruptcy allows businesses to keep their doors open while restructuring debts. In some ways, Chapter 11 bankruptcy is a second chance, or in the case of Colt Defense, a third chance at saving a business.

Businesses facing dire times do not have to perish, and they can potentially save themselves by contacting a bankruptcy attorney to explore options for pursuing Chapter 11 bankruptcy.

The Sader Law FirmKansas City Bankruptcy Attorneys