Gun maker Colt Defense files for bankruptcy protection in U.S.

Famed U.S. gun maker Colt Defense said it filed for Chapter 11 bankruptcy protection on Sunday in Delaware.

The company has a Canadian factory in Kitchener, Ont., which employs 110 people and produces the C7 and C8 assault rifles used by the Canadian military. Colt said the bankruptcy filing will have no impact on employees in Canada and the United States, including at its Kitchener plant.

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The company said it intended to continue normal business operations through the accelerated sale process with the help of $20 million US in credit facilities that its existing lenders have agreed to provide.

Sciens Capital proposed to buy all of Colt's assets and assume secured liabilities and those related to employees, customers, vendors, and trade creditors, Colt said in a statement.
 
Sales of Colt's modern sports rifles and handguns fell 30 per cent last year, and cash dwindled to $11.1 million by May 22, according to regulatory filings.

"We intend to complete the restructuring of our balance sheet we started last fall while meeting all of our obligations to customers, vendors, suppliers and both union and non-union employees," the company said in a statement.

Colt Defense, whose M1911 was the primary sidearm for the U.S. military for most of last century, missed a $10.9 million payment last month to holders of $250 million US of its senior bonds. The company seeks to eliminate those senior bonds from its liabilities.
 
The current management team, led by president and chief executive Dennis Veilleux, will remain in place throughout the process which is expected to be completed within 60 to 90 days, Colt said.
 
Perella Weinberg Partners L.P. served as financial adviser to the company, while Mackinac Partners LLC served as the restructuring adviser.