Utah Gun-Making Company Vector Arms Files Chapter 11 Bankruptcy


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. According to the Wall Street Journal, 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. 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. There are approximately 8,980 Chapter 11 bankruptcy filings each year; this form of bankruptcy helps businesses and enterprises restructure their debts and gain protection from creditor lawsuits. Vector’s legal disputes take place at a time when many small arms manufacturers are suffering from slow business; many of its competitors have shuttered their doors in recent years. “Vector, like most independent small arms manufacturers, has experienced a slowdown in its business over the last year,” Maughn said. 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. 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. Vector Arms will remain open throughout its Chapter 11 bankruptcy proceedings, the Wall Street Journal* reports.

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.

According to the Wall Street Journal, 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.

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.

There are approximately 8,980 Chapter 11 bankruptcy filings each year; this form of bankruptcy helps businesses and enterprises restructure their debts and gain protection from creditor lawsuits.

Vector’s legal disputes take place at a time when many small arms manufacturers are suffering from slow business; many of its competitors have shuttered their doors in recent years.

“Vector, like most independent small arms manufacturers, has experienced a slowdown in its business over the last year,” Maughn said.

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.

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.

Vector Arms will remain open throughout its Chapter 11 bankruptcy proceedings, the Wall Street Journal reports.

Leave a ReplyCancel Reply