RENOWNED GUN MAKER Colt Defense has filed for bankruptcy as it struggles under the burden of heavy debts and the loss of lucrative government contracts.
The weapons manufacturer, which has a history dating back to the early 19th century, said it was seeking court protection as it tried to speed up the sale of parts of its US and Canadian operations.
It was the original producer of the US Army’s M16 rifle, used throughout the Vietnam War, and later the M4 assault rifle.
However in 2013 it lost a large contract to supply US forces with the weapon and it has built up a $355 million (€316 million) mountain of debt. Its Canadian subsidiary still supplies the country’s military with its C7 rifles.
The company said it would continue to operate in bankruptcy after raising $20 million from lenders and it planned to keep trading after going through a restructure.
Its financial backer, Sciens Capital Management, will act as a “stalking horse bidder” to fast-track the sale of most of its assets and debts to the private-equity firm.
‘Open for business’
In a statement, chief restructuring officer Keith Maib said “Colt remains open for business” and it had plans in place for a “challenging but achievable turnaround”.
Colt’s relationship with the US military began in the 1800s and included the design and sale of the Colt Single Action Army revolver, also known as the “peacemaker”, a six-shooter dubbed the “gun that won the west”.
The company describes its founder Sam Colt, who patented the first self-reloading revolver design in the 1830s, as having “played a prominent role in the development of America”.
It previously filed for bankruptcy in 1992 but later emerged from the process.
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