Gun Seller That Bet Big on Hillary Clinton Getting Elected Goes Bankrupt

  
Via:  tessylo  •  5 days ago  •  34 comments

Gun Seller That Bet Big on Hillary Clinton Getting Elected Goes Bankrupt

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Gun Seller That Bet Big on Hillary Clinton Getting Elected Goes Bankrupt



8c9918c0-c65a-11e8-be6d-146281f6bf7a Jeremy Hill,Bloomberg 15 hours ago 






9ba2d2b10c6c6db1770580edd95359e8Gun Seller That Bet Big on Hillary Clinton Getting Elected Goes Bankrupt

(Bloomberg) -- Firearms distributor United Sporting Cos. loaded up on guns ahead of the 2016 U.S. presidential election, expecting a surge in sales would follow the election of a Democrat. Then Hillary Clinton lost.

The miscalculation sparked a multi-year decline that has reached the courthouse steps in Delaware, where United filed Chapter 11 bankruptcy on Monday.

When Republican Donald Trump emerged victorious in the election, United was left with lower-than-expected sales and high carrying costs for unsold inventory, Chief Executive Officer Bradley P. Johnson said in a court declaration.

United, which sells an array of outdoor equipment, is seeking protection from creditors while it sorts out more than $270 million of debt secured by liens on its assets, court papers show. The company, whose subsidiaries include Ellett Brothers LLC and Jerry’s Sports Inc., reported Ebitda of $4 million on net sales of $557 million last year -- well below its average of $885.3 million in sales from 2012 to 2016.

The company had to discount its bloated inventory to stay competitive, trimming already thin margins, court papers show. It also lost discounts and volume rebates from top vendors as its heavy debt burden pressured the company’s balance sheet.

Some of the company’s lenders balked at Johnson’s explanation of United’s descent into bankruptcy. In an objection filed Monday afternoon, attorneys for Prospect Capital Corp. -- one of United’s lenders -- blamed mismanagement at the hands of its largest equity owner, Wellspring Capital Management.

A few years ago, United was the largest distributor of firearms in the U.S., according to the objection. But Wellspring “cashed out” more than $183 million through dividend recapitalization deals in 2012 and 2013, then appointed fiduciaries who “grossly mismanaged the business and depleted all reserves necessary to weather the storms and the headwinds the business would face,” the dissenting lenders said.

Prospect Capital and other term loan lenders have a lot to lose. The objection states that the second-lien lenders will likely recover “a small fraction” of their $250 million loan.

An initial hearing is set for June 11 at 2 p.m. in Delaware.

United isn’t the first gun-industry player to run into trouble in recent years. Remington Outdoor Co. went bankrupt last year. It didn’t help that Gander Mountain Co. and AcuSport Corp. had gone bust, too, and that Dick’s Sporting Goods Inc. pulled back from selling firearms, United said.

“The dumping of excess product into the marketplace pushed prices -- and margins -- even lower,” United said.


Failed Sale

United tried to sell itself this year, hiring Houlihan Lokey in January to find a buyer, court papers show. Multiple parties expressed interest, but United failed to draw an attractive enough offer.

Founded in 1933 as Ellett Brothers, the company had about 321 employees when it filed for bankruptcy. Wellspring Capital Management owns about 60% of of the equity of SportCo Holdings Inc., the parent company of Chapin, South Carolina-based United, the declaration shows. Prospect Capital owns about 21% and Summit Partners owns around 13%.

Wellspring declined to comment. Prospect and Summit didn’t immediately respond to requests for comment.

The case is SportCo Holdings Inc., 19-11299, U.S. Bankruptcy Court District of Delaware.

(Updates to add lender rebuttal, first-day hearing, equity ownership stakes and Wellspring no comment, starting in sixth paragraph.)

To contact the reporter on this story: Jeremy Hill in New York at jhill273@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nicole Bullock

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.



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Tessylo
1  seeder  Tessylo    5 days ago

Were the dumbfucks going with Hillary is coming after your guns like with President Obama?

 
 
 
Ronin2
1.1  Ronin2  replied to  Tessylo @1    5 days ago

They believe the same slanted polls the left did showing Hillary winning in a land slide.

Why not? They were banking on Hillary being as good for gun sales as Obama.

https://www.newsweek.com/gun-sales-down-after-obama-boom-years-573170

Barack Obama became known as America's gun salesman in chief during his final years in office. And gun sales data backs that title up.

Americans purchased more than $29.1 billion in firearms and $16.6 billion in ammunition during his two terms in the White House, an analysisfromThe Washington Postpublished Wednesday found.Some of that was fueled by Obama's repeated attempts to introduce gun control measures that could make it harder for some Americans to buy guns. In contrast, during the 16 years Bill Clinton and George W. Bush were president, Americans spent a total of, respectively, $21.1 billion and $22.9 billion on guns and ammo.

Obama's exit from the White House seems to have provided some Americans relief about the security of their Second Amendment rights. Since President Donald Trump won election in November, gun sales appear to be going down. In December 2016, for example, a popular time for gun sales as Christmas presents, the FBI conducted just 2.8 million backgrounds checks. The year before, the FBI conducted 3.3 million background checks around Christmas. Gun sales so far this year appear to have dropped by 17 percent.

Trump, who has called for an end to gun-free zones, was endorsed by the National Rifle Association during the 2016 campaign. He falsely claimed at one point of his rival, "Hillary Clinton wants to abolish the Second Amendment.”

His victory was bad news for gun manufactures, analysts have said.

"I think the entire gun industry was planning on, and I think the entire country was thinking, that Hillary was going to win,"Brian Skinner, the CEO of Kalashnikov USA, said in a recent interview with CNNMoney."And I know there was huge demand, all the manufacturers had huge orders, and then the day after the election, distributors were canceling orders left and right just because they realized Trump's coming in now."

 
 
 
Vic Eldred
1.1.1  Vic Eldred  replied to  Ronin2 @1.1    5 days ago

Here is the difference between Obama's understanding of the 2nd Amendment and Hillary's:

"When the Supreme Court issued its landmark 2008 decision in D.C. v. Heller, he applauded it. "I have always believed that the Second Amendment protects the right of individuals to bear arms," Obama said.

Not Clinton. When asked in June whether she endorses that interpretation, she conspicuously declined to do so. "For most of our history, there was a nuanced reading of the Second Amendment, until the decision by the late Justice (Antonin) Scalia," she groused.

Asked whether she agrees "that an individual's right to bear arms is a constitutional right," Clinton replied, "If it is a constitutional right, then it, like every other constitutional right, is subject to reasonable regulations." if? "

https://www.chicagotribune.com/columns/steve-chapman/ct-hillary-clinton-first-second-amendent-guns-chapman-perspec-1023-jm-20161021-column.html

 
 
 
Tessylo
1.1.2  seeder  Tessylo  replied to  Ronin2 @1.1    5 days ago

Slanted polls?

jrSmiley_91_smiley_image.gif

'Why not? They were banking on Hillary being as good for gun sales as Obama.'

Right, like she was going to come for the guns like President Obama.  

 
 
 
Vic Eldred
1.1.3  Vic Eldred  replied to  Tessylo @1.1.2    5 days ago

Why wouldn't they listen to Hillary's own words?

 
 
 
Ronin2
1.1.4  Ronin2  replied to  Tessylo @1.1.2    5 days ago

I already posted a link that showed what gun sales were under Obama.  With Hillary being more anti gun it would stand to reason guns sales would jump even more.

I am sorry. The polls were correct- Hillary won and is now president. The whole Trump presidency is just a bad nightmare the left cannot wake up from.

 
 
 
Tessylo
1.1.5  seeder  Tessylo  replied to  Ronin2 @1.1.4    5 days ago

Calling for reasonable regulations is not coming after your penis substitute.  

'The whole Trump presidency is just a bad nightmare the left cannot wake up from.'

You are correct!  

There's a first time for everything I guess.  

 
 
 
SteevieGee
1.2  SteevieGee  replied to  Tessylo @1    5 days ago

Pretty soon you won't be able to buy a gun anywhere in the entire state of Missouri.  [deleted]

 
 
 
Vic Eldred
1.2.1  Vic Eldred  replied to  SteevieGee @1.2    5 days ago

It actually worked out as if Hillary had won!  Isn't that funny.

 
 
 
SteevieGee
1.2.2  SteevieGee  replied to  Vic Eldred @1.2.1    5 days ago

It is.  Who knew Dems were good for guns?

 
 
 
Tessylo
1.2.3  seeder  Tessylo  replied to  SteevieGee @1.2.2    5 days ago

I don't find it funny at all.  

What I do find hilarious is the gun sellers going bankrupt.  

 
 
 
Vic Eldred
1.2.4  Vic Eldred  replied to  SteevieGee @1.2.2    5 days ago

You lost me

 
 
 
KDMichigan
1.2.5  KDMichigan  replied to  Tessylo @1.2.3    5 days ago
What I do find hilarious is the gun sellers going bankrupt.  

Well that's what happens sometimes when you gamble on a future market.

Now if he would have invested in tissue paper, Coloring books and safe space rooms he would have made a killing.

 
 
 
Tessylo
2  seeder  Tessylo    5 days ago

'(Bloomberg) -- Firearms distributor United Sporting Cos. loaded up on guns ahead of the 2016 U.S. presidential election, expecting a surge in sales would follow the election of a Democrat. Then Hillary Clinton lost.

The miscalculation sparked a multi-year decline that has reached the courthouse steps in Delaware, where United filed Chapter 11 bankruptcy on Monday.'

jrSmiley_91_smiley_image.gif

 
 
 
Vic Eldred
3  Vic Eldred    5 days ago

The miscalculation wasn't that Hillary would win, but more like what she stood for!

 
 
 
Tessylo
4  seeder  Tessylo    5 days ago

Mrs. Clinton never said she was coming after your guns.

She was for reasonable regulations.  

That is not coming after your guns, not at all.  

 
 
 
Vic Eldred
4.1  Vic Eldred  replied to  Tessylo @4    5 days ago

I believe that was exactly her position

 
 
 
Sparty On
4.2  Sparty On  replied to  Tessylo @4    5 days ago

Hillary wouldn't know what a "reasonable" gun regulation was if it slapped her in the face and called her momma.

 
 
 
Tessylo
4.2.1  seeder  Tessylo  replied to  Sparty On @4.2    5 days ago

So clever, NOT.  

Don't quit your day job [deleted]

 
 
 
Sparty On
4.2.2  Sparty On  replied to  Tessylo @4.2.1    5 days ago

[deleted]

 
 
 
Paula Bartholomew
4.2.3  Paula Bartholomew  replied to  Sparty On @4.2    4 days ago

How droll.jrSmiley_80_smiley_image.gif

 
 
 
Sparty On
4.2.4  Sparty On  replied to  Paula Bartholomew @4.2.3    4 days ago

[deleted]

 
 
 
Sparty On
5  Sparty On    5 days ago

Great story for the anti-gunners.   Too bad it only tells part of the story and a small part at that.

Chapin-based gun distributor went bankrupt as executives lined pockets

So their problems go back long before Hillary 2016.   In fact they go back before Obama 2008

Age old story .... corporate greed and such ......

 
 
 
Dean Moriarty
6  Dean Moriarty    5 days ago

Hillary lost and so did those that bet on her win. Sounds like good news to me. 

 
 
 
TᵢG
6.1  TᵢG  replied to  Dean Moriarty @6    5 days ago
Hillary lost and so did those that bet on her win. Sounds like good news to me. 

It does not seem as though the owner was a Hillary supporter.   (Not likely that a retail gun establishment owner would support Hillary.) 

However, he apparently was convinced that Hillary would win and pressure gun sales and made an ill-advised business decision to load up his inventory.

Is it really good news that he made such a mistake and killed his company (and the jobs)?

 
 
 
Dean Moriarty
6.1.1  Dean Moriarty  replied to  TᵢG @6.1    5 days ago

Yes it is good when foolish businessmen fail. That’s part of the beauty of a free market. The poorly managed businesses fail and the well run businesses grow and prosper. I never lose sleep when one of my competitors go under. 

 
 
 
TᵢG
6.1.2  TᵢG  replied to  Dean Moriarty @6.1.1    5 days ago

So you really were just expressing the obvious general principle that it is good for the free market to weed out poorly managed businesses.

You did not really mean that it is good when employees of a Hillary supporter lose their jobs.

 
 
 
XDm9mm
7  XDm9mm    5 days ago
A few years ago, United was the largest distributor of firearms in the U.S., according to the objection. But Wellspring “cashed out” more than $183 million through dividend recapitalization deals in 2012 and 2013, then appointed fiduciaries who “grossly mismanaged the business and depleted all reserves necessary to weather the storms and the headwinds the business would face,” the dissenting lenders said.

Per that paragraph, directly from the posted article, it appears to be more a financial looting by a capital (mis)management firm that sealed the fate of United, long before Hillary became an itch on the ass of her supporters.

But reality has no meaning to many on the left.  

 
 
 
Sparty On
7.1  Sparty On  replied to  XDm9mm @7    5 days ago

Yep, see post #5 above.

 
 
 
evilgenius
7.2  evilgenius  replied to  XDm9mm @7    5 days ago
it appears to be more a financial looting by a capital (mis)management firm that sealed the fate of United

It is according to the creditors, but the company itself makes the headlines claim. Either way its mismanagement and a molehill story.

 
 
 
XDm9mm
7.2.1  XDm9mm  replied to  evilgenius @7.2    5 days ago
It is according to the creditors, but the company itself makes the headlines claim

I would tend to believe the 2nd tier creditors.  I'm fairly confident that the financial (mis)management installed a bevy of their own corporate "managers" to guide the company.  You know the type, they know spreadsheets like the back of their hand, but have no idea which end of a gun the bullet comes out of or how to pitch a tent, or build a fire pit or a camp 'latrine'.

 
 
 
evilgenius
7.2.2  evilgenius  replied to  XDm9mm @7.2.1    5 days ago
I would tend to believe the 2nd tier creditors. 

This is what caught my eye when I first read the article last night - 

...attorneys for Prospect Capital Corp. -- one of United’s lenders -- blamed mismanagement at the hands of its largest equity owner, Wellspring Capital Management.

I could be wrong in my memory here, but aren't these capital management companies notorious for driving businesses into the ground and then profited on the sell-off?

 
 
 
XDm9mm
7.2.3  XDm9mm  replied to  evilgenius @7.2.2    5 days ago
I could be wrong in my memory here, but aren't these capital management companies notorious for driving businesses into the ground and then profited on the sell-off?

Actually no.  Most go after companies already in trouble, but ones that have viable pieces.  They'll sell of the seriously troubled parts and try to salvage the most viable part and later sell that off to others or simply capitalize on the company themselves.

Case in point, and from personal experience, National Car Rental.  Back in the mid to late 90's while in MN, I had a company doing telecommunications.  I had a contract with NCR and they were floundering.  A cap-man company came in (damned if I can remember the name of the operation) and installed their own management team.  I lucked out as they kept my company on while getting rid of virtually every other vendor.  

They sold off or spun off (and "bankrupted" losing operations) to focus on the core business.

Needless to say, they must have known what they were doing as National is still around and actually owns other industry 'names' as part of their portfolio.

 
 
 
evilgenius
7.2.4  evilgenius  replied to  XDm9mm @7.2.3    5 days ago

Interesting.

 
 
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