Colt Manufacturing Files Chapter 11 After Losing Government Contract

Colt for decades has provided arms for American soldiers. They began with the Vietnam era with M16s and later the modern M4 rifles were taken to Iraq and Afghanistan. In 2013 the famed gun manufacturer lost its contract with the government. Now after 179 of being in business, Colt has declared bankruptcy.

The company bondholders rejected an attempt to restructure the $350 million dollar debt resulting in the filing ofChapter 11 . Colt borrowed $70 million from Morgan Stanley as a bail-out-loan which allowed the company to pay down interest on its debts. Now under the bankruptcy codes, Colt is hoping for a quick sale as it heads to auction.

The company began failing after it lost the government contract reports FreedomPop. That had been a multimillion dollar contract, and the impact of its loss was devastating to them. A familiar source with the financial situation of Colt, states the government contract loss is what has put the business where it is today.

The M4 , Colt had provided the government is seeing many problems. Soldiers who used the rifle reported it as being unreliable. The rifle performed good in sterile conditions; however in places such as Afghanistan and Iraq it malfunctioned once it got dirty. This particular rifle actually placed last when compared against rival manufacturers in extreme dust trials.

The Pentagon abandoned this rifle much sooner than the conventional military did as it just didn’t stand up for missions in special operations. The Army’s Delta Force replaced it with the H&K 416 back in 2004. This was not the only blow the Colt manufacturing faced. They have also lost considerable law enforcement agencies as well. Glock is now becoming a favorite over the Colt with many police officers.

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