Gun Seller That Bet Big on Hillary Clinton Getting Elected Goes Bankrupt
Gun Seller That Bet Big on Hillary Clinton Getting Elected Goes Bankrupt
Gun 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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Were the dumbfucks going with Hillary is coming after your guns like with President Obama?
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.
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? "
Slanted polls?
'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.
Why wouldn't they listen to Hillary's own words?
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.
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.
Pretty soon you won't be able to buy a gun anywhere in the entire state of Missouri. [deleted]
It actually worked out as if Hillary had won! Isn't that funny.
It is. Who knew Dems were good for guns?
I don't find it funny at all.
What I do find hilarious is the gun sellers going bankrupt.
You lost me
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.
'(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.'
The miscalculation wasn't that Hillary would win, but more like what she stood for!
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.
I believe that was exactly her position
Hillary wouldn't know what a "reasonable" gun regulation was if it slapped her in the face and called her momma.
So clever, NOT.
Don't quit your day job [deleted]
[deleted]
How droll.
[deleted]
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 ......
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)?
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.
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.