Legendary arms-maker Colt has managed the seemingly impossible: Going bankrupt selling guns American

steve knight

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Colt Defense, the storied firearms maker, announced late Sunday that it has filed for a Chapter 11 bankruptcy reorganization..

Colt said that in making the filing in U.S. Bankruptcy Court in Delaware, it hopes the process will allow it to quickly sell its business operations in the U.S and Canada. A firm, Sciens Capital Management, plans to buy virtually all of Colt's assets.

"The plan we are announcing and have filed today will allow Colt to restructure its balance sheet while meeting all of its obligations to customers, vendors, suppliers and employees and providing for maximum continuity in the Company's current and future business operations," said Keith Maib, Chief Restructuring Officer of Colt Defense, in a statement.
 

Praxis91

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Mar 15, 2011
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Meh Colt is another lesson in "adapt or die."

I prefer Kimbers. Beautiful guns (you get what you pay for), those RIA are excellent in the $500 range. I think I'll buy a few more this summer.
 

jkcerda

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Meh Colt is another lesson in "adapt or die."

I prefer Kimbers. Beautiful guns (you get what you pay for), those RIA are excellent in the $500 range. I think I'll buy a few more this summer.
rusted barrels from the factory on plenty of Kimbers, no thanks.
Sig is my preferred 1911. might still get a RIA. got one lemon from Springfield Armory.
 

vrDrew

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Colt's bankruptcy is related to a number of different things. Starting with the fact that they lost a US military contract to supply M4 carbines. Add in an expensive Goldman Sachs loan they managed to miss a payment on. And the fact that lower priced competition in the sport-rifle civilian market destroyed their margins on what had previously been one of their cash cows.

Colt is not going out of business. And their bankruptcy has little, if anything, to do with US domestic politics. Its simply the result of some poor business decisions, and bad timing with relation to the growth of the small arms market.
 
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Scepticalscribe

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Well, I saw this news story on the BBC earlier today and, yes, the OP's thread title did cross my mind in the form of a question which is to wonder how on earth can such an iconic brand need to file for bankruptcy in the US when its business and its history and reputation have all come from selling guns?

Colt's bankruptcy is related to a number of different things. Starting with the fact that they lost a US military contract to supply M4 carbines. Add in an expensive Goldman Sachs loan they managed to miss a payment on. And the fact that lower priced competition in the sport-rifle civilian market destroyed their margins on what had previously been one of their cash cows.

Colt is not going out of business. And their bankruptcy has little, if anything, to do with US domestic politics. Its simply the result of some poor business decisions, and bad timing with relation to the growth of the small arms market.
Ah. A post which places things in three dimensional perspective. Thank you.
 

jkcerda

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Well, I saw this news story on the BBC earlier today and, yes, the OP's thread title did cross my mind in the form of a question which is to wonder how on earth can such an iconic brand need to file for bankruptcy in the US when its business and its history and reputation have all come from selling guns?



Ah. A post which places things in three dimensional perspective. Thank you.
we should bail them out :p
 

Scepticalscribe

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we should bail them out :p
Well, as I am not from the US, - and I don't own a gun, and, until the past two years, I had never so much as even held one - so, at one level, such a debate has little enough to do with me. But it is a curious and intriguing story.

However, from an economic perspective, I must admit that I had assumed that the market for weaponry and guns in the US could be classed as…..inexhaustible. Bottomless.
 
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jkcerda

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Well, as I am not from the US, - and I don't own a gun, and, until the past two years, I had never so much as even held one - so, at one level, such a debate has little enough to do with me. But it is a curious and intriguing story.

However, from an economic perspective, I must admit that I had assumed that the market for weaponry and guns in the US could be classed as…..inexhaustible. Bottomless.
nah, its a roll-a-coaster, up/down/sideways and many times you are like Whisky Tango Foxtrot.
when things get tight the toys are on the chopping block, buy low/sell high and due to the market you WILL get stuck trying to sell off what you bought in anticipation of gun laws being passed or ammo being banned.
sold all my M855 ammo and all my AR's with parts in 2012, back in 08 I was stuck with a couple of Saiga rifles that I had to let go at normal price.
 

aaronvan

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They filed for Chapter 11 meaning they request protection from creditors while they reorganize the company.

During this process they will continue to manufacture guns. In fact, I didn't even see any layoffs mentioned. Good news for all those blue-collar union workers in Connecticut who are busy manufacturing weapons.

Despite what you may read on the Interwebs the M4 Carbine is a good, solid weapon.
 

jnpy!$4g3cwk

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Add in an expensive Goldman Sachs loan they managed to miss a payment on.
--
Colt is not going out of business. And their bankruptcy has little, if anything, to do with US domestic politics. Its simply the result of some poor business decisions, and bad timing with relation to the growth of the small arms market.
Just curious. There wouldn't have been any sneaky leveraged buyout deals in the recent past? I don't know anything about Colt's finances, but, so many times, some get-rich-quick "capitalist" (always using OPM- Other People's Money), sneaks up on some financially conservative low/no-debt company, declares that the company is "sluggish", that it needs a turnaround, that its pension fund is "overfunded", and that it has assets that are "locked up", and proceeds to pull a lot of cash out and load up the victim company with a bunch of debt. Oh, and walk away with huge fees for arranging the whole thing. Later on, the bondholders (aka "suckers") lose bigtime, any R&D the company was doing gets killed or sold off to foreign investors for peanuts, and everybody blames current management for the loss instead of the previous regime that set the whole thing in motion.

Not that I am going to cry if Colt goes under. But, I saw this happen (in a small way) up close, and, have read the papers about such things numerous times in the intervening years. In some cases, the perpetrators are outright crooks; in others, they seem to be true believers in something- debt, I guess. Like I said, I have no idea if this scenario applies to Colt. But, that is one way you could go broke selling guns in America.
 

Scepticalscribe

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Just curious. There wouldn't have been any sneaky leveraged buyout deals in the recent past? I don't know anything about Colt's finances, but, so many times, some get-rich-quick "capitalist" (always using OPM- Other People's Money), sneaks up on some financially conservative low/no-debt company, declares that the company is "sluggish", that it needs a turnaround, that its pension fund is "overfunded", and that it has assets that are "locked up", and proceeds to pull a lot of cash out and load up the victim company with a bunch of debt. Oh, and walk away with huge fees for arranging the whole thing. Later on, the bondholders (aka "suckers") lose bigtime, any R&D the company was doing gets killed or sold off to foreign investors for peanuts, and everybody blames current management for the loss instead of the previous regime that set the whole thing in motion.

Not that I am going to cry if Colt goes under. But, I saw this happen (in a small way) up close, and, have read the papers about such things numerous times in the intervening years. In some cases, the perpetrators are outright crooks; in others, they seem to be true believers in something- debt, I guess. Like I said, I have no idea if this scenario applies to Colt. But, that is one way you could go broke selling guns in America.
Very good post.

Well, anyone who follows football in (rather than makes money from) the UK will have bitter memories of what happened to Manchester United.

Very good point, and instead of focussing on why the Second Amendment failed to supply a bottomless demand for the traditionally admired products of the Colt company, I shall, instead, busy myself ferreting the business pages of a few publications….
 

Technarchy

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Colt is a poorly run company, and has declared bankruptcy numerous times.

Over reliance of federal contracts, union labor costs, unwilling to adapt and innovate due to federal foot dragging, limited support for the civilian market for the last two decades due to federal contract obligations.

Colt makes a great product but can't run a business worth a damn, which is why they are continuously in this same situation.
 
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QuantumLo0p

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Colt makes a great product but can't run a business worth a damn, which is why they are continuously in this same situation.
Exactly. I also noticed a severe lack of discussion on the M and AR series of firearms. With a plethora of AR clones available combined with brand indifference Colt has to adapt to the market or suffer just like any other business. I absolutely love my Colt Sporter Match H-Bar for target shooting even though it is the kinder, gentler and watered down AR version thanks to B.J. Clinton. Putting three shots in the same hole at 100 meters is IMO a more accurate definition of gun control.
:D
 
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Praxis91

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Thanks to capitalism, we have competitors and not limited to just one company. There are plenty of 1911 alts and even more for AR15s. I personally prefer Knights Armament. You get what you pay for. ;)