Breaking: Jerrys Sporting Goods, United Sporting, Ellett Bros Bankruptcy Judge Halts All Sales Till Thursday
What court documents call “the largest distributor of firearms in the United States,” Ellett Brothers—the South Carolina-based firearms distribution company which is part of a larger business known as SportCo Holdings—has filed for Chapter 11 bankruptcy and is one of the “relevant non-parties” in a lawsuit alleging “gross mismanagement” and non-payment of tens of millions of dollars in loans.
United Sports Cos (USC) has been liquidating stock the past week when Friday, July 19th, a bankruptcy judge put a hold on all sales. Our company contact says sales will resume again on Thursday July 26th to liquidate its remaining holdings.
“Bankruptcy Because of Fraud. Ordered to stop stock liquidation till Thursday July 26th. Sales will resume to liquidate remaining holdings.”
Main stream media reported the company banked on Hillary Clinton winning the election and boosted its inventory before the race, CEO Bradley Johnson said in a court filing with the U.S. bankruptcy court in Wilmington, Del. Sales of firearms slowed dramatically after the election of Trump as president in 2016 allayed fears of a Democratic crackdown on gun owners, The Associated Press reported in March 2018. However our inside sources say that fraud had a huge part to do with the doors closing. Our sources are still trying to find out the exact causes and extent of this fraudulent activity.
While the Chapter 11 bankruptcy filing is bad news for the industry, the pending lawsuit filed by Prospect Capital Corp. could be devastating. As reported by The State, the lawsuit “filed by lender Prospect Capital Corp. against Ellett’s owner, Wellspring Capital Management, alleges shadier dealings.”
With the Chapter 11 filing, which apparently did not come as a surprise to some observers, several major firms and a lot of smaller companies are going to take a financial hit that, in the case of the smaller firms, could be devastating, according to The Outdoor Wire.
“When you’re talking a bankruptcy of the magnitude SportCo – you’re talking a lot of impact,” The Outdoor Wire said.
Listed as the “top ten unsecured creditors” in the bankruptcy filing were Vista Outdoors, which includes Savage Arms and Bushnell; Sturm Ruger, MagPul Industries, Navico Company, Henry RAC Holding Corp., Smith & Wesson Corp., Garmin USA, Inc., and Fiocchi of America, The Outdoor Wire reported.
Along with them, other unsecured creditors include Remington Arms, Kel-Tec, Hornady, Heckler & Koch, Leupold & Stevens, Browning, Armscor, Chiappa, Blaser USA, Bond Arms, Trublo, FN America, Magtech and others.
According to The State, Dalton Edgecomb, the chief restructuring officer for USC, said the closure of the Chapin facility “will be permanent and will constitute a plant closing.”
“Although Ellett Brothers LLC will continue to exist,” he reportedly wrote in a memo to the South Carolina Department of Employment and Workforce, “it will be a significantly smaller organization.”
Ellett has been in business for 86 years.