In October 9, one of the nation’s oldest firearms makers submitted a plan to emerge from bankruptcy, calling for a $50 million loan and debt restructuring for its bond holders.
Colt Defense LLC told a U.S. Bankruptcy Court in Delaware that major shareholder Sciens Capitol and “certain of the supporting note holders” had loaned the company $50 million to “allow the Company to execute its business plan and emerge from chapter 11.” Further, debtors such as Morgan Stanley and other banks have agreed to refinance Colt’s debt, though it is unclear how much of a haircut those financial institutions will take.
“We are encouraged by the progress we have made toward a successful exit from bankruptcy and are confident that our filed plan of reorganization strengthens the Company’s balance sheet, provides adequate capital and liquidity to execute our strategic plan and preserves continuity in Colt’s business operations,” said Dennis Veilleux, Chief Executive Officer of Colt. “Today’s announcement reflects broad support for our Plan among Colt’s key stakeholders and positions the Company with a path forward to emerge from Chapter 11 as quickly as possible.”
Colt was forced to file for Chapter 11 bankruptcy protection in June after it couldn’t make interest payments on $250 million in debt. The company’s money problems started catching up to it in November 2014 when Colt couldn’t make interest payments, had to get more loans to stay afloat, then tried to renegotiate the terms of its debt.
Those terms were flatly rebuffed, and Colt was forced into Chapter 11.
The new plan keeps major investor Sciens Capitol involved with Colt, with the company pledging to stay in its West Hartford factory “on a long-term basis.”
The deal is “a testament to the dedication and professionalism of our people, and our senior lenders … who are committed to supporting Colt’s success as an iconic American manufacturer,” Veilleux said.
While Colt hopes to pull out of bankruptcy by the end of the year, the agreement must be approved by creditors and the court.