Utah gun-making company Vector Arms files Chapter 11 bankruptcy

<p dir=”ltr”><span>A Utah gun manufacturer recently sought bankruptcy protection to cope with its mounting expenses and bills, stemming from a three-year legal battle with convicted felon Ralph Merrill.</span></p><p dir=”ltr”><span>According to the</span> <a href=”http://blogs.wsj.com/bankruptcy/2015/02/13/utah-gun-maker-files-for-bankruptcy/”><span>Wall Street Journal</span></a><span>, Vector Arms Corp. — the self-described “source for the best AK47 and *UZI’s on the market” — faces substantial legal debts due to an ongoing dispute over whether Merrill, the majority owner of Vector’s predecessor, sold Vector’s gun-making equipment and inventory to Jason Maughn, its current owner and president.</span></p><p dir=”ltr”><span>The 2011 sale would have taken place after Merrill lost his license to manufacture firearms due to his involvement in an illegal scheme to use China-manufactured bullets to fill a $298 million order for ammunition from the Afghanistan Security Forces. The U.S. Army’s 2006 contract states that none of this ammo could come from China.</span></p><p dir=”ltr”><span>There are approximately</span> <a href=”http://charleshuberlaw.com/blog/detroit-struggling-recover-bankruptcy/”><span>8,980 Chapter 11 bankruptcy filings each year</span></a><span>; this form of bankruptcy helps businesses and enterprises restructure their debts and gain protection from creditor lawsuits.</span></p><p dir=”ltr”><span>Vector’s legal disputes take place at a time when many small arms manufacturers are</span> <a href=”http://www.streetinsider.com/Litigation/Utah-Based+Vector+Arms+Files+for+Bankruptcy+-+WSJ+%28SWHC%29/10270229.html”><span>suffering from slow business</span></a><span>; many of its competitors have shuttered their doors in recent years.</span></p><p dir=”ltr”><span>“Vector, like most independent small arms manufacturers, has experienced a slowdown in its business over the last year,” Maughn said.</span></p><p dir=”ltr”><span>In 2014, Vector brought in just $650,000 in sales, compared to $1.2 million in 2013. Merrill’s lawsuit has made it even more difficult for the company to stay afloat. For example, the lawsuit contains a court order that forbids Vector from moving out of its 9,000-square-foot facility, which is about twice the amount of space the company actually needs.</span></p><p dir=”ltr”><span>By seeking Chapter 11 bankruptcy protection, Maughn says he intends to get Vector out of its current real estate lease and re-arrange the approximately $165,000 in debt that the company owes to its suppliers.</span></p><p dir=”ltr”><span>Vector Arms will remain open throughout its Chapter 11 bankruptcy proceedings, the</span> <span>Wall Street Journal</span> <span>reports.</span></p>

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