Heckler & Koch — maker of the Marine Corps M27 — is in dire straits For decades, German arms giant Heckler & Koch has served as the gold standard for military and civilian weapons manufacturing — building revolutionary and oftentimes game-changing rifles, machine guns, grenade launchers, submachine guns and pistols for a variety of customers including special operations forces, conventional infantry units and law enforcement agencies. After a lackluster 2018, reports indicate that H&K is now struggling to keep its head above water, with the hopes that boosting sales in FY2019 buys the company at least another year to come out of the red and fix the situation it’s in. The Tactical Wire recently reported that German business journals have already predicted the end for what was once one of the most powerful arms manufacturers in the world. In fact, the situation is so bad that, as The Firearm Blog reported just last month, H&K employees jointly voted to increase weekly work hours without paid overtime, as well as nixed a one-off payment of 400 Euros per head for the month of July, so as to provide their beleaguered company some form of relief. Links to this page" SportCo Holdings Files Bankruptcy | Tactical Wire SportCo Holdings Files Bankruptcy Yesterday, the “other shoe dropped” in the matter of SportCo Holdings, the company that owns, among others, Ellett Brothers and United Sporting Co. After months of rumors concerning their overall fiscal health, the company filed for Chapter 11 bankruptcy, saying it planned to liquidate it’s holdings. The company cited management’s impression that Hillary Clinton would win the White House in 2016 and it’s subsequent speculation into guns and ammunition based on that mistaken presumption as one major factor in their failure. Rather than booming sales and healthy margins, they were caught with inventory no one wanted. Company CEO Bradley Johnson also cited other factors, including industry “disruption” caused by the Bass Pro Shop acquisition of Cabela’s, Gander Mountain’s bankruptcy and hurricanes that devastated much of the Southeast, including South Carolina. But there’s more to this story than the long-term impact the failure will have on an already turgid business environment. The top ten major unsecured creditors in the SportCo filing are (from #1 to #10) : Vista Outdoors ($3,299,326.61), Sturm Ruger ($3,196.842.10), Magpul Industries ($2,078,353.17), Savage Arms Rifles ($1,927,392.50), Bushnell Corp. ($1,879,795.66), Navico Company ($1,743,684.04), Henry RAC Holding Corp. ($1,467,618.00), Smith & Wesson Corp. ($1,386, 714.26), Garmin USA, Inc. ($1,150,579.41), and Fiocchi of America ($1,096, 632.70). The filing’s listing of other unsecured creditors reads like a who’s who of the rest of the industry: FN America, Magtech, Remington Arms, Kel-Tec, Hornady, Leupold & Stevens, Heckler & Koch, Barrett Firearms, Browning Arms Company, Blaser USA, Armscor, Chiappa, Bond Arms, Truglo, and SCCY. Keep in mind those are only the top 30 creditors. SportCo’s filing says there are anywhere from 200 to 999 companies and individuals. With SportCo Holdings filing, the industry will be roiled for some time to come. But another legal action, this time a civil suit filed in South Carolina nearly three weeks ago, by a New York financial group lays the groundwork for a story that will have even longer-lasting implications. The first question will undoubtedly be whether the South Carolina suit puts the legality of the Delaware filing into question. That’s because the two corporations listed as holding 10% or more of SportCo’s equity interest are Prospect Capital Corporation and Wellspring Capital Partners I.V. LP. The opposing parties in the South Carolina suit. Prospect Capital Corp., has filled their civil suit against “Wellspring Capital Management LLC; Wellspring Capital Partners IV, L.P.; WCM GenPar IV, L.P.; WCM GenPar IV GP, LLC; Alexander E. Carles; William F. Dawson, Jr.; John E. Morningstar; Bradley Johnson; F. Hewitt Grant; Charles E. Walker,Jr.; Todd Boehly; Bernard Ziomek; Andrew Kupchik; and John Does One through One Hundred.” According to the filing, that listing of individuals, managers and entities were collectively loaned a total of $188,864,420.94, ostensible to build Ellett Brothers LLC and the various affiliated subsidiaries.