courtesy coltautos.com

After losing the contract to produce the majority of the U.S. military’s firearms to FN Manufacturing Colt was left out in the cold, trying to rely on their smaller law enforcement contracts and what little commercial sales they have to keep themselves afloat. That didn’t work and they filed for Chapter 11 bankruptcy protection in June. Six months later it looks like they are ready to emerge from court protection and they intend to do that by cutting some retirees benefits and asking for a huge government handout.

From The Courant:

Critical to the reorganization was the United Auto Workers’ agreement to cut retiree medical benefits for 372 former Colt workers and spouses. The contract had the company paying nearly all the retirees’ expenses that Medicare didn’t cover; the company’s exposure will now be limited to $1,500 per person.

The union succeeded in negotiating a more generous offer, as the company had proposed changing its retiree medical benefits to $1,350 per person.

The majority of retirees spend less than that, but 55 of the retirees have much higher health care costs.

The union also said it will cooperate with management in asking the state to lend the company $10 million, which it would use for working capital, product development and to buy the Colt factory in West Hartford. The factory is owned by a consortium of investors, including the Sciens Capital Management private equity firm that was the sole owner of Colt before it entered bankruptcy in June.

Cutting costs to get on a paying basis is critical for getting any company out of bankruptcy, but there’s a real question as to whether Colt will get the $10 million it’s seeking from the state. The paper correctly states that Colt has been given financing of this kind before, but that was nearly a decade before the Sandy Hook school shooting and well before the current wave of gun control activism swept across the northeast. Given the current political climate it will be interesting to see how receptive Connecticut is to such a request from a company that makes scary “assault rifles” and plans to sell them to the public.

Even more interesting will be the direction the company takes post-bankruptcy. The reason the Colt is where they are is they relied too heavily on government contracts and ignored the civilian business at a time of historic growth in civilian firearms ownership. The smart move would be to start feeding the beast that is the American firearms market and use that cash flow to try to take back the M4/M16 contracts. My gut tells me that given the political climate they are simply going to try the same old LEO/military contract route that got them into trouble in the first place. But time will tell.

Recommended For You

61 Responses to Colt to Exit Bankruptcy by Cutting Workers’ Retirement, Borrowing Money from Connecticut Taxpayers

    • I agree, but if a group of taxpayers has to take it in the shorts, it would be delicious irony for it to be Connecticut voters who end up footing the bill to save a gun maker…

      • I know, it’s hard to contain my excitement. Either a badly-run company is actually allowed to fail in Obama’s America, or else the anti-gun folks get to Feel The Bern of state socialism.

        I’m happy no matter what happens.

    • I bought my Colt 1917 in the last decade, but it was manufactured toward the beginning of the last century. I like my Colt for what it is worth. Almost a hundred years old, but shoots great.

    • Nope. The last new Colt I bought was my Anaconda (humble brag)13?, 14? years ago. They turned me off of their 1911’s with the Series 80 changes, so all my 1911’s are before that. I still kind of want a Peacemaker, but I’ve decided I prefer practical guns instead of safe queens.

    • I bought a 2012 Gold Cup. It was a nice gun. Nicer than anything Colt turned out in the 80s or 90s, but no where near the finishing of their older guns. I ended up selling it because I got hammer bite from it; something I’ve never experienced from any other 1911.

      A plain Jane series 80 1911, or even better, a series 70 reproduction is a pretty decent value in the 1911 genre…if you can find one at MSRP or less. They come with a forged frame, I can’t think of any other 1911s that do for the price. Plus the dancing pony on the side makes resell a snap.

      More than anything, I think their availability, or lack of, hurts their civilian sales. On the other hand, it seems to really help their value on the used market.

  1. Colt ownership has been no friend to TPOTG, I’ll not buy a thing from Colt under current management. I’m hoping they can’t pull it off and the assets are bought up by a company who actually cares about TPOTG and not just arming those who would be our overlords.

    One more thing…. BRING BACK THE PYTHON you imbeciles!
    Yeah I know it would cost $2k but it would still sell.

    • Colt could not bring back the python level of QC even if they wanted to. The master craftsman who expertly tuned and finished those guns are all dead or retired.
      The current master craftsmen lack the know how, or having it, make their own highly refined products that sell like hotcakes with a black order years out. And they are their own boss no corporate hydra to battle with over every little thing.

  2. Their patent expired on the Colt .45 M1911
    Everybody in the world makes AR and M16 pattern rifles
    They stopped producing the Python and Anaconda pistols

    What the hell are they expecting to make and sell in that factory that isn’t already available from other manufacturers? It will have to be a greatly improved product at a greatly reduced price point or they will have no chance at all to compete and if there is much innovation left int he design and manufacture of unique and improved firearms I certainly can’t imagine what it would be.

    I think their first and most appreciated move would be to forget that CT factory and move to a gun-friendly state. It would not surprise me if any number of states would great them warmly and with tax incentives equal to or better than the $10 million it would cost to buy the old shop.

    Meanwhile, I do not plan to buy any Colt stock in the foreseeable future.

    • It’s something to care about because this is the same company that produced the first revolver in history. Sam Colt’s Paterson revolver was truly a revolution and the revolver design was continually improved over the following century, mostly by the Colt company.

      Then when the autoloaders became feasible, Colt was there again producing John Browning’s designs for the 1903, 1909, and the little known, unappreciated 1911 models. Colt was seemingly THE company at the center of all the innovations of firearms for the last 180 years.

      That’s something to care about. It’d be like if Ford, the maker of the Model T, went out of business. It’d be another American icon that fails to exist, which seems to be a reoccurring theme in the country today: the ever present and increase possibility of failure.

      • Colt hasn’t innovated anything in the last 50 years or so. The sad fact is, the American icon that was Colt is already long gone. The name still exists, but the company called Colt today is a faint, pathetic shadow of Samuel Colt’s legacy. Take it off life support, let it die, and hope someone who actually cares about that legacy picks up the pieces. The company’s been restructured or sold off several times already, what’s one more?

  3. Another company asking for a gov’t bailout? I don’t see the anti gun lawmakers in CT giving them money, but if there’s one thing a politician loves more than their political ideology it’s how much they can sell their vote for.

    Even if Colt does get a handout, how long is that really going to last? What’s Colt’s business plan to increase sales? They’ve lost their military contracts, they have little police contracts, and their civilian guns are so expensive they’re pretty much only used as novelty or collector’s pieces.

    This company is a dead brand. The only buzz that surrounds it constantly is its financial troubles. If Colt made some new or exciting stuff it might be different, but that is not the case and I doubt Colt, even if bailed out, will bring anything new to the table.

    The VIP’s in the company are trying to kick the can down the road in hopes they get better offers from other people.

      • No, back when I took a colt armorers course, they offered an SBR semi auto rifle. 10″ barrel if I recall. It was a sweet handling rifle.
        The lower was stamped “Commando”

        • D’oh. Jarred my memory and did some google-fu. The m4 before it was the m4. Completely brain farted on that one.

        • I think the Commando was more the predecessor of the MK18.

          I had one that was marked M16, with ‘Commando’ stamped on the next line, on the mag well. It had an 11.5 inch barrel. I lost it fairly quickly because I gained it through an improper trade with a sergeant with the unit we were working for. It was very convenient in the gunner’s well of a huey. C’est la vie. Officers kept taking my unauthorized 1911s too, though they gave me what I paid for them. (Black market 1911s were prized over the issue .38 revolvers.)

        • No such thing as an improper trade. Just lifers with a stick up their ass. Get the job done was the important thing. Crap like regulation weapons can be sorted out when everybody is back in the world.

  4. If, and that’s a big if, they are able to secure a bailout from the government sector, expect it to have some extremely anti-gun stipulations attached to it, for example mandated “smart gun” development, contractual agreements with all re-sellers for above-and-beyond record keeping (photographs, unable to transfer if the BGC “times out”, name it, the anti-gunners will make it a contractual obligation)

    All of which will [rightfully so] incur the wrath of the gun buying public which will cause them to fail again and hopefully for the last time.

    Adapt or die.

    O2

  5. Cutting costs to get on a paying basis is critical for getting any company out of bankruptcy

    As an attorney, I’ve been involved with handling many corporate bankruptcies over the years. While cutting costs is always important for any business, even one that’s not on the ropes, I know that no company can save it’s way out of bankruptcy.

    If Colt can’t increase its sales and achieve sustainable profits, it’s all done as a going concern. If the gangsters (like Malloy) who run CT can’t figure that out, then they deserve exactly what they’re going to get. And so do the idiots who elected them.

    • Against the instincts of the typical leveraged buyout shark private equity operator, I consider Colt a good example of control fraud by management. The proposed deal is more of the same, allowing the owners to cash out yet again, by selling the factory to the union. The fact that the factory was taken out of Colt Industries and held separately simply shows great planning on the part of the Mis-management.

  6. Yeah, I agree, no government hand outs. That’s capitalism, baby. You run your company poorly, despite having a once amazing product, and you deserve to close down and have someone else fill the void.

    How about being competitive? The Colt Python was (is) beautiful, but c’mon. Adapt to the market and put out an awesome, $500-700 revolver and call it the Colt Boa, or take what you learned by making the 1911 and produce a line of great automatics.

  7. Hey CT, can I get a $10 million loan to start a business? No? But a poorly managed bankrupt company with little to offer can? That seems totally fair.

    If a company can’t secure financing in the private sector, that should be one giant red flag for any government not to get involved or give them money, which they shouldn’t be doing anyway.

    • The difference between you and a company is a company is made up of many people with the potential to make something and turn a profit from it.

      You might be able to hit the lottery.

  8. It’s time to pull the plug. What exactly does Colt own that’s actually valuable?

    Without any new products in the pipeline in an already overcrowded market, what is the likelihood that they’d ever be able to earn enough to even keep funding operations, let alone pay off their debts?

    As far as I know, they’ve got no patents anybody is interested in. They lost their government contracts. That leaves them with the Colt brand, real estate, their tooling and manufacturing equipment, and their unsold inventory. Sum all of that together, and is that greater than their expected revenues?

  9. colt has never been friendly to civilian firearms ownership always dependent on govt money. its a basket case company always has been

  10. I’ll go with meh. I NEVER see new Colts in any local gun stores either(IL or NW IND). Do they still make Colt 45 malt liquor???

  11. Would anyone here really care if colt went under for good? Putting aside any sort of historical nostalgia, what purpose would bailing them out serve? Companies have risen and fallen, colt does nothing today that isn’t done by hundreds of others. I also wouldn’t hold my breath for new pythons.

    • Not really, I guess. Colt and Remington, two of the oldest gun makers in America deserve to gun out of business for very different reasons. Remington because their quality is horrible and Colt because they make nothing people want.

      My only concern if Colt went out of business is how high the Uberti made Colt clones would go up in price.

  12. Have owned a number of Colt products over the years. Still kicking myself for letting both of my Pythons go.
    They were absolute jewels. Well. jewels that got out of time quickly with hot loads and then spit lead back at you, but nonetheless had many redeeming qualities. Colt needs to get the hell out of Connecticut, and head south like so many other firearms companies. If they don’t, whatever bailout they get will be useless. I bought a LW 1911 Govt model last year, and really like it. However, the company had NO WAY to email them. From their website, you have a choice of faxing, calling, or snail mail! My first “real” CCW gun was a Colt Commando, circa 1983, which was basically a Detective Special with a rougher trigger and parkerized finish. That gun served me well and started my long affair with guns and shooting. I guess I’ll always like the products they make/made, but if they stay there, they deserve to fail. Ruger and Glock have made money hand over fist with the boom in firearms sales, and Colt struggles? UAW perhaps?

  13. Now i know why they lowered their msrp’s in new issue of american rifleman. “Now owning an heirloom quality colt is more affordable than ever. We’ve lowered pricing on nearly every colt model to ensure that every firearm enthusiast has the opportunity to own a piece of history” exact words in ad.

  14. As a CT Taxpayer. I’d push for the state to NOT loan Colt any money. The whole reason they are in trouble is the terrible financial mismanagement of the company.

    Nick mentions the loss of government contracts. He does not mention upper management using the Company as an ATM for the last 10 years. If the principals in the company had been financially responsible, even with the loss of the Government contract, could would be fine.

    Colt should be allowed to fail. Then its name could be bought up by a responsible party. Normally I’d say “Name and Intellectual property”. But I’d bet Colt hasn’t filed for a patent in 30 years.

    Don

  15. So could Connecticut see this as an opportunity to require Colt, on condition of a bailout, to produce only AWB-compliant weapons and promise to invest in “smart gun” technology, etc…?

  16. Actually, you’re missing the sleight-of-hand going on here. Note this part of the story “buy the Colt factory in West Hartford. The factory is owned by a consortium of investors, including the Sciens Capital Management private equity firm that was the sole owner of Colt before it entered bankruptcy in June”

    Soooo…what you have here is private equity firm that drove them bankrupt trying to get back at least part of its investment by selling them the factory. Very frequently, companies in financial trouble do a sale/leaseback of their real estate to free up working capital. This is the opposite of that. You watch: the factory will be given a spectacularly high value.

    This is about shifting taxpayer dollars not so much to Colt, as to Sciens Capital Management.

    • I made this point above in a reply, before I came upon your post. Yes, that is absolutely the feature of the proposal that stands out. The owners have already scammed out much more than their investment, through extraordinary dividends and such. Time to let them hang until dead.

  17. On a semi-related note, this is why you DON’T rely on employer pension or government welfare benefits for your retirement. SAVE EARLY, SAVE OFTEN, INVEST SENSIBLY.

    Your accounts are yours. Accounts set up by others supposedly for your benefit are subject to their whims.

  18. I’d love to see the marque go to someone that actually gave a damn about it and start innovating again; I don’t believe there’s nearly as much innovation to be done as there used to be, but there’s still some ways to go in development of innovative features for firearms and ammunition; Maybe they should clone Stoner or Browning and see if they can help out………………..

  19. This is the true hypocrisy of some who profess to be capitalists.
    1. Bring a “management group” in to “turn around” a failing publicly owned company.
    2. Get a ridiculously high line of credit sometimes backed by the fed.
    3. Give the “management group” most of the dough from the line of credit as bonuses.
    4. The business continues to fail due to lack of resources.
    5. Debts are packaged as an investment opportunity and sold to large mutual funds.
    6. The “management group” takes more dough from the investors when they bail out.
    7. A new “management group” is brought in to repeat the process.

    Learn these 7 steps, shine your shoes and your line of BS and you can skip Harvard Business School.

  20. First, it’s wrong for them to cut retirement.
    Second, it’s wrong for them to borrow money from tax payers.
    Down with the nanny state. If they can’t figure out how to do business morally, ethically, and with common sense, they don’t need to be in business.

  21. The irony of it all; the anti-gun UAW wants the anti-gun State of Connecticut to financially underwrite a gun making concern.

    As always, follow the money.

    • The money has already been stolen, this isn’t a union issue, it’s a capitalism issue. There would be no need for a “loan” if the private equity douchebags hadn’t plundered the business.

  22. This has nothing to do with a “nanny state” – this is pure (unfettered) capitalism in action. Privatize gains, socialize losses & destroy a valuable business (and many livelihoods) for personal gain, damn the costs or the repercussions.

Leave a Reply

Your email address will not be published. Required fields are marked *