Colt Defense is nearing the end of its journey through Chapter 11 bankruptcy, and expects to secure an additional $50 million in capital under its reorganization plan. As one of the oldest and most well-known firearms manufacturers in the United States, Colt Defense has provided weapons for Vietnam, the Civil War, World War I and World War II.
After filing for Chapter 11 bankruptcy, Colt Defense secured approval from the court to borrow $10 million in debtor-in-possession financing to continue operating. This approval from the bankruptcy court bought Colt Defense time to restructure, survive and find a path forward to becoming profitable again.
Sciens Capital Management, Fidelity National Financial and Newport Global Advisors will provide an additional $50 million in financing under the Chapter 11 bankruptcy reorganization.
Colt Defense began to struggle financially after losing a major contract with the U.S. military, which had been a major source of business. After losing the contract, Colt Defense had difficulty paying interest on its existing $350 million in debt obligations. The company was eventually forced to secure a $70 million loan from Morgan Stanley just to meet interest payments.
Chapter 11 Bankruptcy Can Help Save Colt Defense
Chapter 11 bankruptcy protections have given Colt Defense, a company that has existed since 1855, the means to survive into the future. This story can show that almost any company is capable of facing difficult financial times. However, there are options for companies with unsustainable debt obligations and interest payments to emerge victorious from difficult financial situations.
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