Famed U.S. gun maker Colt Defense LLC said it filed for Chapter 11 bankruptcy protection and its current sponsor, Sciens Capital Management LLC, agreed to act as a "stalking horse" bidder.
Colt said it intended to continue normal business operations through the accelerated sale process with the help of $20 million in credit facilities that its existing lenders have agreed to provide.
Sciens Capital proposed to buy all of Colt's assets and assume secured liabilities and those related to employees, customers, vendors, and trade creditors, Colt said in a statement.
Sales of Colt's modern sports rifles and handguns fell 30 percent last year and cash dwindled to $11.1 million by May 22, according to regulatory filings.
Colt Defense, whose M1911 was the primary sidearm for the U.S. military for most of last century, missed a $10.9 million payment last month to holders of $250 million in its senior bonds.
The current management team led by President and CEO Dennis Veilleux will remain in place throughout the process which is expected to be completed within 60 to 90 days, Colt said.
Perella Weinberg Partners L.P. served as financial adviser to the company, while Mackinac Partners LLC served as the restructuring adviser.