Colt’s Manufacturing Co., the historic gun maker rescued two years ago in a buyout partly financed with state pension funds, on Thursday filed for federal bankruptcy court protection.
Colt’s petition for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code came after a frantic search for cash to help it survive weak commercial gun sales, dwindling military contracts and a wide-ranging company restructuring.
In a deal worked out late Wednesday night, Colt’s bank, Creditanstalt, and the Connecticut Development Authority agreed to provide up to $10 million in debtor-in-possession financing, allowing it to maintain day-to-day operations.
Documents filed by Colt’s in U.S. Bankruptcy Court in Hartford listed liabilities of $82.5 million and assets of $91.5 million as of March 1.
“Being in Chapter 11 is not a situation to which a prestigious company with a 156-year-old tradition like Colt’s would aspire,” President Ronald Stilwell told employees. But he said it will eliminate “months of uncertainty that could have a negative impact on our business.”
Hartford-based Colt’s operates two plants with 925 employees, about 680 of them represented by the United Auto Workers.
It was founded in Hartford in 1836 by Samuel Colt, the inventor of the first successful repeating pistol. The Colt name has long symbolized the power of the gun.
Colt’s produced the six-shooter known as the “gun that won the West,” as well as the world-famous Colt 45 automatic pistol. The company also makes the King Cobra magnum and the AR-15 rifle.
Two years ago, a coalition that included the state pension fund, striking workers, outside investors and Colt managers bought the company from New York-based Colt Industries Inc., ending a prolonged and bitter strike.
The purchase price was never disclosed, but the state provided $25 million in pension funds for a 47% stake, making it the largest single owner. Union workers and managers each controlled 11.5%.
But Colt’s faced an enormous challenge in a climate of declining civilian gun sales and shrinking military budgets.
The gun maker took a major blow in 1988 when it lost a $110-million Army contract for the M-16, a rifle it had developed, to FN Manufacturing, the American subsidiary of Fabrique Nationale, a Belgian gun maker.
The new company has been working to recover business and has secured contracts from clients that range from Kuwait and Saudi Arabia to local police departments in this country.
Colt’s also confirmed the resignation of Anthony D. Autorino as chairman and chief executive, who disclosed Wednesday that he had stepped down March 1 to pursue other interests. It named Worth Loomis, president of the Hartford Graduate Center, as chairman of the board.