Many in Salem may associate bankruptcy with poor financial decisions. This is often true even in cases of commercial bankruptcy. Some may think that unethical money management practices or out-of-control spending led those companies that have filed for bankruptcy into doing so. The fact is, however, that a number of factors go into a business’ financial struggles, many of which are out of their management’s control. Not even those companies that enjoy a renowned name or popularity with the general public are immune to them.
Take the gunmaker Colt. Few tales exist of the old American west that don’t involve Sam Colt’s peacemaker. One could reasonably argue that no American artillery company is as well-known. Yet in borrowing a phrase from its own history, Colt is currently staring down the barrel of a potential bankruptcy.
After over 160 years in business, lagging sales have placed the company in a precarious financial position. Its current struggles recently came to light after it was revealed the company missed an interest payment in excess of $10 million to bondholders. Those same bondholders subsequently rejected a proposed restructuring of Colt’s debt. The company is currently nearing the end of a 30-day grace period to make the payment. If it’s unable to do so, it may be forced to seek bankruptcy protection.
If companies such as Colt aren’t immune to the potential need for bankruptcy, then no company may be. In many cases, the decision to file for bankruptcy may be the best that a company can make. Those running businesses that are struggling though financial difficulties may want to speak with an attorney to determine what their debt relief options truly are.
Source: The Daily Caller, “Bankruptcy On The Horizon For Colt,” Taylor Beck, June 11, 2015
