Gunwerks Sued By Creditors

Discussion in 'Main Message Board' started by wedgy, May 21, 2020.

  1. wedgy

    wedgy Gold $$ Contributor

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  2. wedgy

    wedgy Gold $$ Contributor

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    Wells Fargo Bank has sued the Cody-based custom-rifle maker Gunwerks, LLC, for $2.8 million for unpaid loans and wants the company's equipment, according to federal court records filed Wednesday.

    Gunwerks, which expanded its facility with a Wyoming Business Council-recommended loan package, also owes $1 million to creditors and and for unpaid sales taxes, according to the complaint by the bank and Wells Fargo Equipment Finance, Inc., through its attorneys at the Casper office of Crowley, Fleck, PLLP.



    "These circumstances require the immediate appointment of a receiver to recover, salvage and retain the value of the Collateral," according to a separate motion for a court-appointed receiver.

    The collateral includes Gunwerks' equipment, inventory and intellectual property. Gunwerks has signed off on the request, according to the motion for a receiver. "For the reasons specified in the Complaint and summarized in this Motion, the appointment of the Receiver is in the best interest of Wells Fargo, has been agreed upon by the Borrower, and is necessary to preserve the value of the Collateral.

    Wells Fargo recommended as receiver Focus Management Group, which has worked with firearms companies.

    Besides what the company owes to Wells Fargo, the complaint said Gunwerks financial report in February told the bank that it owes more than $622,000 in past due bills, according to the complaint.

    Likewise, the financial officer told the bank that Gunwerks stopped paying sales tax in the third quarter of 2018 and the amount due was $365,000, according to the complaint.

    What all this means for the company's future and its employees is unknown.

    A Gunwerks' spokesman did not return calls seeking comment.

    Gunwerks manufactures custom-made rifles that can, with a few adjustments, shoot accurately 1,000 yards out of the box, CEO Aaron Davidson said in a YouTube promotional video from the Wyoming Business Council. The company also makes optics, ammo and gear.

    However, the Wells Fargo filings did not discuss the company's current relationship with the Business Council, which in September 2018 recommended Gunwerks' request for a $3 million grant and a $3 million loan package to expand its manufacturing facility.

    In October 2018, the State Loan and Investment Board -- comprised of the state's top five elected officials -- approved the request. The new facility would be owned by Cody economic development organization Forward Cody and leased to the company.

    As a result of the anticipated expansion, the company said it would add 52 jobs, according to a report by the Business Council.

    In March 2019, the company along with government and business officials broke ground for the new facility, which was expected to be completed by December.

    Gunwerks' expansion garned widespread publicity in regional media outlets and national publications including the NRA's American Rifleman and The Gunmag.

    Neither Wyoming Business Council CEO Josh Dorrell nor Forward Cody CEO James Klessens returned calls seeking comment.

    For its part, Wells Fargo Bank and Wells Fargo Equipment Finance outlined in its complaint the loans they made to Gunwerks, and the SM Group, LLC, whose sole member is Davidson.

    The defaulted loans as of Monday total $2,783,757.82, with interest accumulating at more than $20,000 a month plus costs and legal fees, according to the motion for a receiver. Of that total, Gunwerks owes $2,437,524.39 for the operating loan.

    After Gunwerks defaulted on the operating loan, the bank asked Gunwerks to provide a list of accounts owed to it plus invoices, but it refused, according to the complaint.

    Likewise, Gunwerks refused to transfer back to Wells Fargo money the company transferred to another bank despite its agreement to maintain its deposits at Wells Fargo. Wells Fargo believes those funds were from the sale of its collateral, according to the complaint.

    "The Borrower has taken control of Wells Fargo's collateral, refuses to disclose the names and addresses of account obligors for accounts that constitute collateral for Wells Fargo and has removed and refused to remit proceeds of Wells Fargo's collateral to prevent such collateral from being applied to the Borrower's loans," according to the complaint.
     
  3. Dub

    Dub NRA Life member Gold $$ Contributor

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    sounds pretty messy
     
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  4. shortgrass

    shortgrass Silver $$ Contributor

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    There's a long thread on another forum about the price of "custom" rifles (lots of whining, really) , with Gunwerks being mentioned in particular. It's a tough market out there to become the next Cooper or Kimber.
     
  5. hogpatrol

    hogpatrol Gold $$ Contributor

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    Evidently, their business model was flawed. With hunter numbers dwindling, the market for uber-high priced rifles just isn't there anymore.
     
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  6. McGraw

    McGraw Silver $$ Contributor

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    Anyone around Cody have the inside scoop?
    Sounds like another con-artist preying on a a local economic board. I have seen it happen before.
     
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  7. Daddymac

    Daddymac Gold $$ Contributor

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    Anytime you borrow money, it's a risky venture, a couple of slow or bad months and you can be in trouble, and when you piss off the tax man, yikes.
     
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  8. 338 dude

    338 dude Gold $$ Contributor

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    The rifles are way too expensive for my little budget but it’s a shame to see anything like this happen in the sport that we all love so much
     
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  9. Nightraider

    Nightraider Silver $$ Contributor

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    So, this is what happened with TL TECHNOLOGIES. The bank allowed the company to grow, taking loans, then pulled the rug. My belief is that this is a form of gun control. WF is very anti gun.
     
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  10. Dusty Stevens

    Dusty Stevens COVFEFE- Thread Derail Crew Gold $$ Contributor

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    Well this is awful for gunwerks but its also hard to believe they have that much debt to start with
     
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  11. Papa Charlie

    Papa Charlie Gold $$ Contributor

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    Not an unusual story.
    Small company does well.
    Pushed to expand they take out loans and grants to expand.
    Market is not what is expected and running a larger company is not the same as a small one.
    Company not use to the funds expands too fast and ends up draining cash too fast without sufficient revenue.
    Company starts robbing Peter to pay Paul.
    Company ends up in bankruptcy or litigation.
     
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  12. mensajd

    mensajd

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    Pricey, but interesting turn-key long range hunting rifles. Niche product for sure but the engineering was sound.
     
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  13. BenPerfected

    BenPerfected Gold $$ Contributor

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    Just business 101
     
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  14. me124704

    me124704 Gold $$ Contributor

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    Perhaps they should have considered making their loan payments...
     
  15. jds holler

    jds holler Gold $$ Contributor

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    Being stupid with money remains one of the most common afflictions among us humans and our society. And some of the brightest and most talented people are not immune.

    There is a lot to be said for slow steady growth in any business --- and our personal lives for that matter. jd
     
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  16. Papa Charlie

    Papa Charlie Gold $$ Contributor

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    That is the sad part. Generally these small business do very well because of the craftsmanship of the owner.
    But being a craftsmen and being a business man are two very different things and generally at odds with each other.
    We have all seen small businesses that have great craftsmen building or doing amazing work, but are poor business men. We tolerate the inconveniences because of the product or service. But imagine if they tried to expand with their current business skills.
    This is why it is not uncommon for businesses when making that jump from craftsmen shop to production manufacturer will bring in business management experts.
     
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  17. SPJ

    SPJ Gold $$ Contributor

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    It is a shame but as you say perhaps more of a niche or specialty market, of course businesses come and go all the time y’all may be surprised how much debt banks forgive so in the end it may work out just fine.
     
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  18. Bill K

    Bill K Silver $$ Contributor

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    Sounds like they paid attention to the building and selling of their rifles and not any attention to paying back the loan payments, therefore they got themselves into a bind they cannot come out of.
     
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  19. 338 Mollett

    338 Mollett Gold $$ Contributor

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    In the day,I sat down with pen ,paper and a beer to draw up a business model for expansion.And what I discovered was that I'm fine right where I'm at.To counter act the headaches ,equipment ,labor,etc.a market would have to double just to realize a 10% more profit. Ain't worth it to me.
     
  20. JimT

    JimT “I don’t even own a piece of camo!”-Kenny Jarrett Gold $$ Contributor

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    Last edited: May 21, 2020
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