Crashing Down: United Sporting, Ellett File for Chapter 11, Face Lawsuit

Crashing Down: United Sporting, Ellett File for Chapter 11, Face Lawsuit
Crashing Down: United Sporting, Ellett File for Chapter 11, Face Lawsuit

U.S.A.-(Ammoland.com)- Described in court documents as “the largest distributor of firearms in the United States,” Ellett Brothers—the South Carolina-based company that is part of a larger business family 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.

It’s a troubling tale that has been reported by Reuters, Fox Business and other news organizations, and according to The Outdoor Wire, the downfall could involve more than “the long-term impact the failure will have on an already turgid business environment.”

In addition to Ellett, the SportCo Holdings umbrella covers United Sporting Companies, Inc. (USC), and Ellett-owned companies Simmons Gun Specialties, Evans Sports, Inc., Jerry’s Sports, Inc., Bonitz Brothers, Inc., and Outdoor Sports Headquarters, Inc. All are headquartered in Chapin, S.C.

According to The State, an honored South Carolina newspaper dating back more than a century, Ellett has announced that it will lay off more than 170 employees and close the 250,000-square-foot Chapin facility by August. Notices of layoffs went out earlier this month.

Contributing to the USC and Ellett troubles, according to Reuters, was the expectation that Hillary Clinton would be elected in 2016, so USC “boosted inventory” prior to the election “expecting the higher sales that historically follow a Democrat’s election.”

That much can be demonstrated by healthy gun and ammunition sales during the Obama administration and even earlier during the Clinton administration prior to the imposition of the ten-year ban on so-called “assault weapons” and original capacity magazines. Mention gun control on Capitol Hill, especially with Democrats in the majority, and gun stores across the nation have seen business spike.

But Donald Trump’s surprise victory left the company what The Outdoor Wire described as an inventory of guns and ammunition that “no one wanted.” Reuters described it as “a glut of inventory.”

There were other factors that resulted in what have been described in news reports as “significant disruptions” among “other retailers.” The Fox and Reuters reports referred specifically to the sale of Cabela’s to Bass Pro Shop in 2017 as an example.

Net sales fell from an average of $885.3 million for the years 2012-2017 to $557 million in 2018, Reuters reported.

Essentially, Trump’s victory was considered good news for gun rights but bad news for the industry with declining sales because, at least for the time being, gun owners do not feel threatened. While that may change during the next 16 months leading up to the 2020 election, the problem USC and Ellett, and the other companies under the SportCo Holdings umbrella, is immediate.

It should be noted that SportCo Holdings is a separate entity from Sportco and Outdoor Emporium, two Washington State-based sporting goods retail stores.

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.”

Ellett Brothers 2014 Distributor of the Year Award, One of many they recieved over the years.
Ellett Brothers 2014 Distributor of the Year Award, One of many they received over the years.

The lawsuit alleges that in 2012 and 2013, “Prospect loaned collectively $160 million to Ellett Brothers, LLC…and several of its subsidiaries.” But the money allegedly went to several of the defendants rather than being used to invest in the business.

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.


About Dave WorkmanDave Workman

Dave Workman is a senior editor at TheGunMag.com and Liberty Park Press, author of multiple books on the Right to Keep & Bear Arms and formerly an NRA-certified firearms instructor.

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    KatieLaurenkarenAlanJay Brooks Recent comment authors
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    karen
    Member
    karen

    HEY GUYS IF YOU ARE LOOKING FOR A NEW DISTRIBUTOR , GIVE ME A CALL KAREN WILKINS 1-866-671-3600
    HICKS INC.. WHOLESALE DISTRIBUTOR

    StLPro2A
    Guest
    StLPro2A

    If you know how many guns you have….you don’t have nearly enough.
    If you wife knows how many guns you have……she’ll file for divorce…..inflating the number to her lawyer by three times…and the value by ten times.
    Please don’t ask how I now,,,,,sad, sad tale.

    freewill
    Guest
    freewill

    according to an article from ammoland a while back, back ground checks hit another record for April..so whats wrong with this picture?

    alan springer
    Guest
    alan springer

    What is wrong with picture is,as an Ellett Bros. dealer I can tell you , people are buying their guns at the big box stores hence the record background checks while distributors like Ellett Bros. and others are having a tough time. People say well I bought from the box because I saved a little money, well just wait till you have a problem with said gun and see if the box gives a rats a** if you get your problem solved ! I can bet if you bought it from your local mom and pop gun shop they would… Read more »

    Robert Parker
    Guest
    Robert Parker

    Alan, I’m an Ellett dealer also. Now I have to figure out where I’m going to get the supplies I’ve been getting for the last 18 years from Ellett or just stop selling them when they run out. They also have great people working there that I will really miss. I wish them the best in finding new employment.

    alan springer
    Guest
    alan springer

    I am in the same boat,I buy most of my smaller items,ammo,optic mounts etc. from Ellett Bros. so I’m looking for a dist. to take their place. Don’t quit selling these items cause as you know a lot of these items the customer can’t get these at wally world or the person in sporting goods can’t answer their question cause they were working in the shoe dept. till yesterday also as you know these are normally higher profit items. Do you buy from Bangers ? If you don’t get in touch with Lauren Matthews she is good !

    Lauren
    Member
    Lauren

    awwww…thanks for recommendation, Alan! I very much appreciate it, and your business!

    Lauren Mathews
    Bangers, LP
    800.721.2264

    karen
    Member
    karen

    HELLO MY NAME IS KAREN WILKINS AND I AM A WITH HICKS INC. A WHOLESALE DISTRIBUTOR
    I WOULD BE GLAD TO HELP SERVICE YOUR STORE! YOU CAN CONTACT ME @1-866-671-3600

    Katie
    Member
    Katie

    Alan,
    Not true at all. Ellett, as well as MANY other distributors, supply big box stores. A lot of it has to do with the Manufacturer controlling it. If all manufacturers were like Hornady, that will not allow their product in Big Box Stores, the gun industry for Mom and Pops stores would flourish. If all dealers came together and banned the transfer of guns from budsgunshop.com etc, they would also disappear.

    Robert Parker
    Guest
    Robert Parker

    The number of background checks can be deceiving. More than one firearm can be transferred on a single check. In 2012 & 2013 ~ 50% of the checks we ran were for more than one firearm. Today it is rare for a customer to purchase more than one at a time.

    Mike
    Guest
    Mike

    As a dealer, I can tell you this, just because there are sales or there is a spike in NICS checks it doesn’t mean gun shops are making a profit. We are just selling to try to put money where we can make a little. There will be even less profit now that they will liquidate the Chapin inventory. We make more money doing a $20 transfer on a $400.00 than we can actually selling it. Let that sink in. Personally if S&W, Ruger, Savage and Springfield disappeared tomorrow it would have no impact on my business nobody makes money… Read more »

    NH Guns And Ammo LLC
    Guest
    NH Guns And Ammo LLC

    100% agree.

    Jay Brooks
    Guest
    Jay Brooks

    One issue is doing a $20 transfer. If gun stores would realize that cheap transfers promote buying online and perpetuate the problem. Raise the transfer rates to close the gap between online and in store. Stop taking transfers from ctd and buds guns and others like them. If transfers are 100 plus, people would stop buying online.
    Also, only support gun brands and products that have and enforce MAP.

    Alan
    Guest
    Alan

    Bull, a transfer is a customer who is in you store. You no have a chance to sell them mom or other accessories.

    LUVITORLEEVIT
    Guest
    LUVITORLEEVIT

    I agree completely. I wish I could afford more. Everyone does not wish to be unarmed. I wish some of Bloomberg’s money could be diverted to me. I would certainly put it to good use.

    Mr. Bill
    Guest
    Mr. Bill

    This shouldn’t even be news. However, if it makes the anti-gunner feel good it’s a plus. A chapter 11 isn’t even news. The airlines file chapter 11 every business cycle.

    Vanns40
    Guest
    Vanns40

    It’s not just the Chapter 11 but the accompanying lawsuit by the unsecured creditors, or did you miss that part?

    Robert Parker
    Guest
    Robert Parker

    Vanns40,
    you are right! I read the entire filing and the news is the ~189 million dollars borrowed from lenders and paid out to executives and share holders of the management company with no equity to Ellett Bros (that’s legal talk for STOLEN). Don’t forget the 170+ employees who are losing their jobs in Chapin SC, a community of ~1700 people.

    Roy Payne
    Guest
    Roy Payne

    I can understand the company’s thinking because I shared in it. Hearing every “expert” telling us for months that Hillary would win in a landslide, my wife and I bought a number of guns. But we did it prior to the election … not after. And even at that time, when we were looking for an AR-15, we had trouble locating a dealer that had any in stock. Apparently a lot of people in our area were stocking up against the coming “apocalypse”. Of course, Hillary didn’t win and we were glad for Trump’s victory. Someone recently asked if I… Read more »

    George Clark
    Guest
    George Clark

    I say you can’t own too many guns. I try and buy a least two long guns an a pistol every year. Have been doing it for a couple three years. Ran out of safe space long ago. Do i plan to stop? Not on your life. Stay safe

    So Sueme
    Guest
    So Sueme

    How many guns are enough? Always, one more than I currently own.

    Darkman
    Guest
    Darkman

    As a Gunaholic I can honestly say. 100 isn’t enough.