Colts Creditor Committee will be formed in Delaware Bankruptcy Court on June 25, 2015
Delaware – Monday, June 15th, Colt Defense, filed for Chapter 11 protection in the Bankruptcy Court in Delaware. Sciens Capital Management also announced its intent to become the stalking horse for Colt Defense, in which it already holds a majority of the equity.
Emerald Capital Advisors is a leading financial restructuring shop focused on advising distressed situations, with a core competency in representing Official Creditors Committees in Chapter 11 cases. In the last decade, Emerald Professionals have represented in excess of 45 Official Committees. Emerald Capital Advisors is led by John P Madden, the founder and Senior Managing Director of Emerald Capital. John has more than 17 years of direct experience advising various types of clients in all phases of both financial and operational restructuring. Emerald will be seeking the assignment as the financial advisor to the creditor committee, an effort bolstered by its Senior Advisor, and industry veteran, Michael H Blank. Mr. Blank is no stranger to this type of an effort having worked the shutdown of the Winchester licensee US Repeat Arms in 2006. Mr. Blank also handled the Sabre Defence collapse in 2011 and has had involvement in a host of similar deals in the industry working for both creditors and bidders.
"I am reaching out to those who are facing financial uncertainty do to this situation" said Mr. Blank. "This includes not only bondholders and trade creditors, but all unsecured creditors alike. Sciens has put forth a plan, but things rarely go according to plan. This is definitely true in situations like this where so much is being contested in court." Blank continued, "Let's face it, despite best intentions Colt has made some serious missteps to be in this much trouble despite a boom market that was concentrated in the products to which their brand should own in the marketplace." Mr. Blank went on to state that he is optimistic that this still strong brand will attract a lot of interested parties, particularly as their brand does have such a role to play in both the concealed carry and the MSR segments. "Colt is one of those brands that has always held a special place in the hearts of the gun owners, not only in the US, but across the globe. It's hard to quantify what the value of that is to a go forward operation at this moment, but there definitely is value and that value, at this time, is what we will try to help harness to the benefit of the creditors."
Contrary to the current plan put forth by Sciens, John Madden believes the bankruptcy process will last much longer than the originally proposed 60-90 day period and further, he believes it is unlikely that Sciens and the current management team will be in place at the end of the process. "Due to Sciens Capital Management attempting to completely wipe out the bonds and retain equity ownership - despite not putting any new capital into the Estate - their proposed transaction, which effectively attempts to end-run the Absolute Priority Rule, will be strongly contested." Mr. Madden also asserts that since the current proposed bid is effectively zero cash consideration, it sends a strong signal to the market place that may trigger a robust auction with many interested parties. "As in all Chapter 11 363 sales processes, the transaction still allows for higher and better bids, and the low floor set by Scien's Stalking Horse bid may spark interest from strategic and financial purchasers who have been following the situation closely." Madden added that, "In addition to purchasers, there will also undoubtedly be competing Plans of Reorganization that are proposed as alternatives to a sale."
Due to the current proposal (which will be heavily scrutinized as an insider transaction by Judge Silverstein), the objection of the bondholders, competing plans, and the potential for many unknown purchasers, it is crucially important that unsecured creditors (bondholders and trade vendors) get active in the process. Considering the uncertainly of the Company's future, unsecured creditors cannot count on any promises from current management. Those who seek a seat on the Unsecured Creditor Committee afford themselves the chance to get unprejudiced, professional services of the Committee's choosing. These Professionals are paid for by the Debtor's Estate and can help attain assurance for payments on pre and post-petition claims, as well as ensure a healthy, well capitalized entity to do business with post restructuring.
About Emerald Capital Advisors
Emerald's comprehensive platform is supported by extensive research, in-depth knowledge, and access to capital, with a reputation for providing clear, unbiased, innovative solutions to distressed companies and their stakeholders across all industries and sectors. For over 17 years, Emerald professionals have advised distressed companies or their constituents across all levels of the capital structure on a myriad of transactions ranging from large complex deals to small unique situations exceeding $100 billion in aggregate debt restructured.
Contact: Michael H Blank MBlank@EmeraldCapitalAdvisors/646-861-2475
