Colt’s to Present Reorganization Plan, But Fight Over Famous Name Looms
HARTFORD, Conn. (AP) _ Colt’s Manufacturing Co. is loading up for a bankruptcy-court brawl over its plan of reorganization, which could determine who owns the name and patents of the storied gunmaker.
Ronald C. Whitaker, Colt’s chief executive officer, says if all goes as planned, the reorganization plan will be filed Wednesday with the federal bankruptcy court in Hartford.
Whitaker said he’s hoping the plan will let Colt’s, which sought Chapter 11 bankruptcy protection six months ago because of heavy debts, continue operating under its famous name, with its valuable patents intact.
But the plan faces some major challenges. One of the biggest is the opposition from CF Intellectual Properties, Inc., a group formed to market the Colt name. CF has alleged that it owns the name and patents. The group further says Colt’s owes it more than $4 million in back royalties.
Colt’s attorneys maintain CF Intellectual has no monopoly over the Colt name, considered essential to the company’s survival.
Founded in Hartford in 1836 by Samuel Colt, inventor of the first successful repeating pistol, the company produced the Colt-.45 caliber six- shooter known as the ″gun that won the West,″ and has been a major arms maker for the Defense Department.
Recruited last spring to manage Colt’s shortly after it sought protection from creditors in bankruptcy court, Whitaker says he would not have taken the job if he had not been assured that Colt’s would keep its renowned name. ″Frankly, it’s only been the Colt name that has marketed our product in recent years.″
Greg Fetter, an arms industry analyst with Forecast International in Newtown, Conn., agrees. Fetter says Colt’s could not survive if it loses one of the world’s better-known trademarks.
A committee of Colt’s creditors, meanwhile, has accused CF Intellectual of greedily protecting its own interests at the expense of Colt’s survival prospects.
Colt’s Manufacturing Co. was formed two years ago. The company was put together following the takeover of Colt Industries, which had verged on collapse because of a bitter, four-year strike by the United Auto Workers.
The UAW represents two-thirds of the 925-employee workforce at the company’s two Connecticut plants.
The new owner was a group of outside investors, the UAW and the state of Connecticut. The purchase price was never revealed, but state officials, fearing the loss of 1,000 jobs, put up $25 million in state pension funds in exchange for 47 percent of the stock in Colt’s Manufacturing.
Colt’s is saddled with debt from the takeover and faces a dwindling military market and flagging civilian sales. Whitaker, who has a long record of managing troubled companies, readily acknowledges he inherited a challenge.
He says he has spent the past three months streamlining Colt’s corporate structure - firing 12 percent of the salaried work force - and modernizing production in the West Hartford, Conn. plant. Among that plant’s products are the world-famous Colt .45-caliber automatic pistol and the King Cobra Magnum.
″When I got here we were doing things the way they were done in the ’50s,″ Whitaker said in an interview last week.
Besides an outmoded production process and quality-control problems, he said, previous managers had allowed unused inventory to pile up all over the plant.
Whitaker, who says the UAW has supported him, predicts he can lead Colt’s out of bankruptcy court by next March - if a workable restructuring agreement can be reached.