The iconic US gun maker Colt Defense has recently made the decision to place itself into voluntary bankruptcy and has seen a scheduled court hearing to determine the future of the company hit a few problems with bondholders looking to hold its owner accountable. Reuters reports Colt has recently found itself starved of cash after a series of contracts with the US military expired. Bondholders who attended the first bankruptcy court hearing argued that Colt’s equity fund owners, Sciens Management has not freed up cash or funding for the company to complete its orders for sporting goods produced under its trademarks.

According to Kevin Seawright, a group of large bondholders is attempting to block the latest moves by Sciens Management to sell the Colt brand to itself for the value of its debts. The equity management company would then take control of the company for a value of zero dollars and continue trading without the debts and bonds held by its investors in place. The judge presiding over the case made it clear this was a strange deal to take on and made sure the company had enough funds to continue trading for the rest of the week before a further hearing takes place on Monday.