Colt Seeks August Auction After Bankruptcy Filing

Colt is going through bankruptcy… again.

Colt Defense LLC filed for chapter 11 bankruptcy protection Sunday, warning its business is in a fragile state and it needs a quick sale to survive.

The bankruptcy filing was expected for the famed gun maker, which failed to win the support of bondholders for a debt-reshaping agreement. Colt had said if it couldn’t reach a deal, it would put itself up for sale in bankruptcy.

Papers filed in the U.S. Bankruptcy Court in Wilmington, Del., estimate the company’s debts and assets are both in the $100 million to $500 million range. Liabilities include more than $100 million in top-ranking secured debt and the $250 million bond debt.

Colt is racing to get to the auction block by Aug. 3, with an opening buyout offer from Sciens Capital Management LLC, Colt’s private-equity backer.

In court papers, Colt said it can’t afford a long court fight with bondholders, and could have to liquidate if the chapter 11 proceeding becomes a long, litigious bankruptcy.

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The history of business is replete with stories of companies that hit upon a successful idea or product, rose to the top of their markets, stagnated, and then collapsed into irrelevancy.

Colt hasn’t innovated in years, and coasted for a long time on a combination of long-term brand recognition and institutional sales. “New” products were nothing more or less than variations of 1911 pistols more than a century old, and variations of M16/M4 rifles originally designed more than 50 years ago.

Colt didn’t innovate. It shows no signs of being capable of innovating.

Let it die, and liquidate what there is to salvage.

Perhaps it will serve as a wake up call for other gun manufacturers that are seemingly at that the top of their games, but who haven’t had a truly new idea in years.

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