Original M4 Carbine Maker Files for Bankruptcy


Colt Defense LLC., today filed Chapter 11 in federal bankruptcy court to remain open during an accelerated sale of long-time gun maker’s business operations in the US and Canada.

The move is the latest attempt by the struggling company to survive in an extremely competitive small arm industry.

Colt, the original maker of the M4 Carbine, seemed to lose some of its standing when the U.S. Army acquired expanded licensing rights in 2009 that made it possible for the service to invite other gun companies compete for contracts to build the weapon.

Before that happened, Colt had been the sole maker of the M4 for about 15 years.

In surprise move, Colt outbid FN Manufacturing to win four-year contract, worth $126 million, to make M240B machine guns for the U.S. Army in the fall of 2009.

But in February 2013, FN Manufacturing outbid Colt and Remington Arms Company to win a contract worth about $77 million to make M4s and M4A1s for the U.S. Army.

The drama all began when the Army chose Remington over Colt in 2012 the carbines. Colt protested that award twice.

The GAO did rule in favor of Colt’s first protest over the Army’s miscalculation of royalties it would receive for contract awards on its M4 design. The ruling forced the Army to rework the original solicitation so the vendors that fell into the competitive range could submit new price bids. All gun makers involved were forced to reveal their previous price bids for the original $84 million contract to keep things fair.

Colt officials then filed a second protest with the GAO three weeks after the Connecticut-based gun maker received the Army’s amended solicitation. The GAO denied Colt’s second protest.

Colt did win a $54.4 million contract last year, with Manroy USA, Spindale, N.C., to make heavier, M4A1 replacement barrels and front sight assemblies as part of the Army’s M4 Carbine Product Improvement Program for the conversion of M4s to M4A1 carbines.

But later that year, FN reclaimed its control over the M240B machine gun by outbidding Colt and winning an Army contract worth $84.6 million to make the 7.62mm MG.

It’s worth mentioning that Colt won $22.5 million contract from the Marine Corps to build 10,000 custom 1911 .45 caliber Close Quarter Battle Pistols for Marine special operators.

Colt’s decision to file Chapter 11 will allow it to continue its business operations with no impact on customers, vendors, suppliers and employees according to a June 15 press release.

Colt’s current sponsor, Sciens Capital Management LLC (“Sciens”), has proposed to purchase substantially all of Colt’s assets and assume secured liabilities and all liabilities related to existing agreements with employees, customers, vendors, and trade creditors, according to the release.

The notice of the pending sale to Sciens will be given to third parties and competing bids will be solicited, with an independent committee of Colt’s board of managers established to manage the bidding process and evaluate bids, according to the release.

“While entering Chapter 11 protection in the absence of a consensual agreement with our noteholders was not our preference and we do not take it lightly, we are confident it is the best path going forward and will enable us to continue to gain traction on a challenging but achievable turnaround in our business performance and competitive positioning in the international, U.S. government and consumer marketplace,” Keith Maib, Chief Restructuring Officer of Colt Defense, said in the release.

Colt’s existing secured lenders have also agreed to provide, subject to approval of the bankruptcy court, $20 million “in debtor in possession credit facilities” to allow for continuation of operations in the ordinary course of business during the Chapter 11 process. The entire process is expected to be complete within 60-90 days.

In addition to the U.S. business, Colt Canada Corporation makes the C7 rifle and C8 Carbine for the Canadian military.

About the Author

Matthew Cox
Matthew Cox is a reporter at Military.com. He can be reached at matthew.cox@military.com.
  • JCitizen

    To me Colt deserves this – there is no excuse for a gun maker of the most popular and top selling platform in rifles to lose money during the panic buying that happened in the last few years. If they had stayed on top of the demand for AR rifles, and boosted production so there wouldn’t have been such a shortage, as was witnessed by all of us; they would have made one of the biggest fortunes since Sam owned the business!! They are the only manufacturer that can ramp up that kind of production, and they could have undercut the market and forced out of business many of the custom makers that now dominate the market. Thanks to Colt’s shortsightedness we have a plethora of arms manufacturers in the US. I’m not saying this is bad, I’m just saying Colt missed the boat, and they have no excuse for it. It is like the only way they know to do business is to lobby congress for military contracts and wait for Uncle Sugar to come up with the business largess. Colt forgot how to do business the old American way – simply supply the demand!! Doh!

    • Dmax

      Arrogance and refusal to ‘devalue’ their products because, well, they are Colt, certainly didn’t help them. Especially when you consider that their elevated price point carried no tangible benefits to the consumer. Why would I want to pay several hundred dollars more because it has a horse engraved in the side of the lower receiver? A case of ammor with the new rifle, or just a colt and no ammo…hmmm…

      • JCitizen

        I agree, but for many during the panic, they didn’t care if it was a Colt, or a Windham Weaponry, or a DPMS, or whatever. They just wanted an AR, and they wanted it ASAP! They paid huge prices all during that time period. Not me – I already had mind stashed, but I’ve seen this game before, so I got it while it was cheap.

    • Docsenko

      Colt basically priced themselves out of the market. I have seen up to $ 700+ difference between Colt and others who are just as accurate. Colt is going to go away if they do not change their marketing strategy.

    • I completely agree with your statement. I have felt, for years, that Colt was out of touch with public demand. I was never able to find a Colt firearm that I could afford. It is truly a shame the executives have run the company into the ground. They could have put out a more affordable firearms to the public and be expanding like all the others. Very stupid!

  • Guest

    Colt has missed the boat in more than one way over the past three or four decades. One of the ways was by putting all their eggs all in the military basket to the exclusion of the civilian market.

    • Rusty Shovel

      That’s what killed the original Indian Motorcycle company. Harley was forced to innovate when they lost the their military contract. Indian, who’d “won” the military contract, stagnated and died.

  • Lance

    Some of it is union fault they are HQed in CT which is a heavy left wing state. FN is in SC which is a right to work state. Politics is at play here. Like Remington in the 1890s Colt will in the end find a way to stay alive. They must open there doors to more civilian sales and cut cost. In the end who wants to pay $200-$500 more for Colts logo on the lower???

    • JCitizen

      The problem was there were no Colts at the dealers I checked at either. So you can’t sell what you don’t have in inventory. Colt = Doh!

    • ANon

      You have some credible source on that claim other than the “wing” of the state?

  • JohnD

    Colt got,screwed by the MIC it was once part of. We bought M-16s from FN so,we could get the Minimi and the MAAG. We kept, Colt going by buying M-4s and M203s. We stopped the M1911 purchases for the Beretta. Instead of going with true US companies we bought from foreign companies who,built factories in the US getting around the rules! Then ten state of CT and Gov. Malloy screwed them with their antigun laws which only prevent lawful shooters guns. Then their poor business practices and of course, hiring Gen. Casey really tanked the company!

    • Peter Wang

      Heaven forbid we buy the best product at the best price. Subsidizing bad behavior, poor judgment, and a substandard product or price point is a bad idea and twice on Sunday. The 1911 could not keep up in testing with either the SACO (now Sig) or Beretta. What does Colt bring to the table other than “Merica”?! And if a weapon is made in America, it usually supports American jobs and the American economy. So who cares.
      Next I suppose I should buy a Ford or Chevy that’s made in Mexico, versus a Japanese or Korean car made in the USA. Which of those is more American by the way?

      • somebody

        I would just point out that in situations like this where foreign firms build a plant in the US, even though the lower level manufacturing jobs are based in the USA, the corporate profits flow overseas.

        • JCitizen

          Heck the big corporations are so world bound, I imagine hardly any money stays in any one country.

        • Peter Wang

          The biggest direct impact is still based on where the work is being done, i.e. the local economy. So, comparatively, building an “American” product overseas does NOT help the American worker or economy generally speaking. The company that puts JOBS on the ground where the rubber meets the road is more important, even if that company happens to be foreign.

  • Guest

    The military stopped buying 1911s in 1945. That is a ways back. Colt had the opportunity to compete for the new pistol contract, but their R&D had stopped with the 1911.

    • Guest

      The 1911 was replaced by the M9 in 1985

      • Peter Wang

        He’s talking about when they stopped buying them, not when it was replaced. The 1911 inventory was decades old when it was replaced.

        • Guest

          Very old and very rickety. I remember seeing an arms room 1911 in the late 70s, a Colt, that the frame had a 4 didget serial #. The slide was a Remington Rand and who knows how many times it had been rebuilt. The link pin looked like it had been made from a piece of a nail. The armorer tried to issue it to me.

      • Greg

        1911 to 1945 was already quite a long time for a pistol.

        • DocSenko

          Colt continued making the 1911 to this day. Just for the civilian market. They want so much for them that most will not buy them. They built a 9mm in a 1911 frame, but it was not accurate. I purchased a Ruger 9mm 20 yrs. ago and still shoots like a dream.

        • guest

          Only the frame, the slide would have been WW2 vintage.

  • Muttling

    The M4 story is the same as the 1911’s story. Colt came up with the original design, but the military paid them to develop the design and the military owns the design rights (not Colt.) After the first production run, they could hire any company to build the weapons. Heck, prior to WWII Nazi Germany was making 1911’s.

    Colt isn’t very good at being cost competitive and (while they make good weapons) they’re starting to have a lot of competition in the quality area as well. Not a recipe for survival.

    • Blaster

      Colt developed the M4 on Colt’s nickel. Since Colt owned the patents, the Pentagon was stuck with Colt. Now Colt is paying the price for screwing the Pentagon.

  • 45k20

    Civilians buy far more weapons than the military, and yet Colt has very little consumer exposure. No one’s fault but their own.

    • Docsenko

      That is because of cost. They want a lot for their products. Ever see the price on a Diamondback lately? Or a Python?

      • 45k20

        Yes, there is a Python in my vault right now. It’s on loan from a friend because it needed work (timing issues).

        Over-rated and over-priced…..of course they have not made them since 2004.

  • OldFedVet1941

    Too Many High Paid Executives sucking up the profits!

  • JEFF

    Should’ve pumped some money into R&D for some new products. Maybe relocate to a business/gun friendly state too.

    • Guest

      Maybe even a right to work state.

  • AIM

    The financialization of the American economy

    American De-Industrialization
    Continues Unabated

    US de-industrialization will result in military crashes

  • JFO

    Three reasons for this:
    1.) Price: They charge 2-3 times more than their competitors for an average product.
    2.) Contracts: They lost the pistol military contract in the ’80’s and never pushed for a way to make up that loss.
    3.) CCW: Since states loosened concealed carry laws in the ’90’s, people look for small and light weight. Most folks don’t want to carry around a three pound steel 1911 with 8 shots, when they can carry a polymer 9mm weighing a fraction of that with 10+ rounds. And for all the 1911 disciples, I know I’m speaking blasphemy. You’ve all seen a .45 ACP round take down a charging elephant at 1,000 yards. Got it. In the real world, though, a 9mm is plenty effective when properly placed.

    • DesertRat71

      I can think of 4 instances where people were shot point blank in the head with a 9mm and are still walking around. Yup, helluvan effective round.

      • Guest

        If they were shot with 9mm FMJ hardball, yes it is not very effective. Modern hollow points are a different story. As a former combat medic I have seen my share of people shot with 45acp fmj it isn’t always that effective either.

      • seans

        And plenty of people have been shot in the head with .40,45ACP, 5.56Nato, 7.62 Nato/Short, 8mm, 30.06, 300 win mag, and plenty much every caliber invented. Shot placement is key.

    • Big Daddy

      The reality is the 9mm JHP is a fine round and performs well. But people will still argue that the .45 ACP is a man stopper, even though there is no such thing as stopping power. Everything from ballistics to wound experts say they cannot tell the difference between a 45, 9mm, 40 or .357 SIG wound, they are all similar. But don’t tell that to the .45 fanboys. 45 makes bigger holes, yet a Federal HST 9mm +P 147 grain penetrates almost 12″ and opens up to .75″. Don’t try facts it won’t work.

      • Docsenko

        There are differences depending on the ammo. FMJs are about the same. The exception to a small extent is the .45 ACP/GAP. These are slow moving ammo and tend to push prior to penetration. Applies a little more shock power to the system. Now go with JHP. Depends on the ammo again. Ranger ammo will inflict more damage than home defense ammo. Both are devastating and the large calibers create larger cavitation upon impact. The victims bleeds faster 9mm +P+ cavitation about the size of a .50 piece. .45 about half the size of an average fist. Also, the .45 will more likely remain in the body expending all of its energy. What is meant by a man stopper. If the heart is hit, or the brain, it will stop the victim cold. The only ammo to truly get that name is the .357 magnum. They even dropped deer with it.

        • seans

          You have no clue what you are talking about do you.

        • guest

          Pistol ammo is too low velocity for effective cavitation.

    • Ronin

      No not blasphemy, just your being stupid. I’m old enough to remember the reason we dropped the 1911.
      1) We forced the 5.56 on NATO when the wanted to keep the 7.62 or develop a new round somewhere in the 6 to 7mm range so we were forced by politics to take the Beretta and the 9mm.
      2) There are other pistols that carry 10 to 15 rounds of .45. The 9 is great with modern designed rounds but in FMJ the .45 still out classes the 9 and that’s what our Military has to use FMJ.
      3) Polymer is not the end all and be all. The weight of the 1911 can be used as a weapon. If you were slapped with it in close quarters you would know what I mean. The original design spec for the .45 was to make a charging horse falter or turn aside.

      The .45 was born out of the Moro Insurrection. I suggest you read that. The .38’s had to be replaced with single action .45 to put down the Moros who would get hopped up on berry juice and wrap the torsos in leather for crude body armor.

      The weight you say most don’t want to carry. If it works a soldier will carry it. So will a civilian. In my daily work I carry the 1911. But sometimes I have to dress for the pistol and sometimes I carry smaller.

      The point is the Military has to carry what is issued no matter how the weapon system got into the military.

      Your comment is weak and ineffectual on to why most don’t want to carry “3” pounds and on the 1911 and .45 in general.

  • Reuben

    Sad, when you put your own nails, in your own coffin.

  • TangoDown

    Sad, we keep going around this 9mm/.45 ACP carousel. Carry/USE what you WANT…what YOU find effective FOR YOU! Geez…

  • Big Daddy

    Colt has been mismanaged for years. Like many other American companies it has been abused and the money sucked out of it. I hope another American company with firearms experience buys it and makes that company relevant again. An inexpensive 1911 would be a good start. I have a Rock Island and it works fine. How about a retro semi-auto version of the original M16s, the older experimental/Air Force & Army versions and an A1. Those would sell to people looking for that retro look. How about a simple striker fired poly gun like the Glock. Colt made pocket .380s that cost more than a full size Glock, how many do the think they are going to sell? The parts for an Colt AR15 cost 2-3X as much as other Mil-Spec parts because they say Colt on them, no thanks. All the police dept. looking for a good inexpensive Mil-Spec M4 that turned to Bushmaster because of price point instead of the overpriced Colt. They should have moved to the South or here in Texas to save money a long time ago.

    • Guest

      Excellent post

  • IAC

    OTWH,it’s a d@mn shame.
    OTOH,if they couldn’t compete on the open market, it’s expected.

  • Greg

    They did the same thing in 1992.

  • Leo Johnson

    My Grandson tells me that this weapon is just like it’s predesseor The M-16 It “Jam’s ” in a prolonged engagement.Just a waste of Taxpayir’s Money.

    • guest

      Don’t believe everything you hear about the M4

  • ERonc

    Colt enjoyed it’s monopolies to the fullest. When they lost them they were in no position to help themselves. They are stuck in a state that cost to much to manufacture stuff. Workers are paid a union wage. Labor costs, lower taxes, less restrictive regulation not to mention incentives from gun friendly states makes Colts more expensive to start. Mil-Spec from X is no worse than Colts Mil-Spec.

    Colts R&D ended with the Commander. How long to R&D a polymer striker fired pistol? H&K came out with polymer in 1970. Glock 1982. Guess they figured it was a fad till 1990 when they came out with that P.O.S. Colt All American 2000.

  • Docduracoat

    Why all the hate on Colt?
    I see the Colt LE 6920 on sale at Atlantic Firearms for $800, normally it is $900
    That is the going price for a middle level AR-15 in 2015
    It is as close to mil spec as a civilian can get
    We can argue whether mil spec is good enough or only a starting point.
    You can trust your life to a Colt. Certainly our soldiers do.
    My Colt Sporter Lightweight in 7.62 x 39 has been performing perfectly since I bought it in 1995
    Shoots steel case and is far more accurate than my Arsenal AK
    Works fine with c products mags, frankenmags, even with 5 rounds loaded in a 5.56 mag.
    Broke a bolt lug in 2010, after firing literally thousands of rounds.
    Replaced the bolt with a superbolt and still chugging along after another 1,000 rounds
    No one says Colts’s quality is down. Their prices are in line with FN, Bushmaster, Rock River
    Even an Olympic is $900.at Atlantic. And it is a low end rifle!
    The hedge fund running Colt has looted the company, and they show very little innovation.
    But there is nothing wrong with Colt AR 15’s

    • jay

      Inovate or die. You can only go so far, with technically impared lefty investors and retired generals running a technical company.
      With the chapter 11 bs,they’ll still survive and pollute the market further.

  • SgtMjr

    I hope Colt Canada sticks around. Guys love their rifles and so do SOF in a bunch of countries.

  • JothaK

    If folks are lining up to drop $5000+ on a used Python or other snake then why wouldn’t Colt knock the dust of their tools and start selling revolvers again?

  • Valvatorez

    Should have been chapter 7 liquidation. With chapter 11 Colt survives long enough be released from debt and get another contract that will save them for five or ten years before filing again.