A gun seller who stocked up on firearms assuming Hillary Clinton’s presidential victory would cause a surge in demand has reportedly accrued $270 million in debt and has been forced to file for Chapter 11 bankruptcy, according to Bloomberg.
United Sporting Cos. expected a surge in sales following the election of a Democrat in the 2016 U.S. presidential election. The miscalculation has instead led the company to the courthouse steps in Delaware, where United filed Chapter 11 bankruptcy on Monday to protect itself from creditors.
With Trump’s victory, United was left with lower-than-expected sales and high carrying costs for unsold inventory, according to a court declaration by CEO Bradley P. Johnson.
The company reported a steep drop in net sales in 2018, going from an average of $885.3 million from 2012 to 2016 to $557 million last year, according to Bloomberg.
One of United’s creditors, Prospect Capital Corp., filed an objection to the filing, arguing mismanagement by Wellspring Capital Management, the company’s largest equity owner, was to blame for the decline
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.