By Jim Christie
SAN FRANCISCO, Sept 11 (Reuters) - Bankrupt gunmaker Colt says settlement talks with the landlord of its Connecticut factory are being put at risk by its official committee of unsecured creditors, which wants to bring claims over the facility's lease.
The committee last month filed a motion seeking an order that would give it standing to bring and settle claims related to Colt's soon-to-expire lease for its West Hartford, Connecticut, factory.
The committee said its concerns about the lease are rooted in ties between the facility's landlord and Sciens Capital Management, which owns about 87 percent of Colt.
It said the private equity firm is using the lease unfairly to increase its leverage in the case and to discourage possible bidders for Colt.
As Colt sees it, the committee's effort could not come at a worse possible time. The committee "runs the risk of undermining the fragile progress made in ongoing settlement discussions involving the landlord," the gunmaker said in court papers filed on Thursday in U.S. Bankruptcy Court in Wilmington, Delaware.
If the committee gets its way, it could become impossible for Colt to enter into extensions of the lease, sell its rights under the lease to a third party or propose a reorganization plan including extended leases, the company said.
Colt filed its court papers opposing the committee's plan a week after a company lawyer said the gunmaker and it creditors were close to a deal on a plan to bring Colt out of bankruptcy.
Hurt by falling sales of its sport rifles and the loss of military contracts, Colt filed for Chapter 11 bankruptcy protection in June with a plan to sell itself to Sciens.
Under that plan, which was abandoned, holders of Colt's $250 million in bonds would have received nothing.
Bondholders have proposed their own plan, which includes eliminating much of their debt in return for control of Colt.
The case is: In Re: Colt Holding Co LLC, U.S. Bankruptcy Court, District of Delaware, No. 15-11296 (Reporting by Jim Christie; Editing by Grant McCool)