Popular gun brand files Chapter 7 bankruptcy, faces liquidation

While people buy guns for all sorts of reasons, gun sales follow a very specific pattern.

“Firearm sales go up in election years,” Mark Oliva of the National Shooting Sports Foundation told Pew Pew Tactical, and the data back him up.

Gun sales have increased every election year since NICS went live, although things got off to a slow start. In 2000, the first post-NICS election year, 8.5 million Americans submitted to an ATF background check; however, the 2004 election saw only a slight uptick, with 8.7 million requests, according to FBI data.

The presidency of Barack Obama sparked fears that he would push for increased gun regulation, as this pattern accelerated.

"Since 2008, background checks have increased an average of 146% every four-year cycle. During Obama’s first run for the White House in 2008, gun owners rushed the doors to the tune of 12.7 million background checks, one and a half times the number recorded four years earlier," the website shared.

Much as the Covid pandemic caused a lot of financial challenges in the electronics, home exercise equipment, and furniture spaces because demand became uneven, these patterns have led to multiple bankruptcies in the gun space.

Now, Umbrella Armory, a custom gun manufacturer in the recreational firearms space, has filed for Chapter 7 bankruptcy.

Umbrella Armory bankruptcy at a glance

While it was less likely that recreational guns, which do not fire lethal bullets, would be outlawed, the current slowdown has had a wide-ranging impact, including Umbrella Armory's decision to liquidate.

• Umbrella Armory LLC, a private recreational firearms company, filed for Chapter 7 bankruptcy on March 3, 2026, in the U.S. Bankruptcy Court for the Central District of California, according to Inforuptcy.
• The filing is a voluntary Chapter 7 liquidation, meaning a court-appointed trustee will sell assets to repay creditors, reported Bankruptcy Observer.
• The company reported estimated assets of $0 to $100,000 and liabilities between $100,001 and $1 million, added Bankruptcy Observer.
• Court documents show the company has between 1 and 49 creditors, according to PacerMonitor filings.
• The bankruptcy case number is 6:26-bk-11538 in the Central District of California, added PacerMonitor.
• The company operated in the airsoft equipment sector, selling high-end customized airsoft rifles and parts, according to Edhat.

Gun sales have been cyclical

"The industry's fortunes tend to rise and fall based on the country's political climate. Under former President Barack Obama, firearm sales grew as enthusiasts worried about potential regulations. Sales softened after President Donald Trump took office, pledging to defend gun rights," The Wall Street Journal reported.

Gun sales have been falling, and competition in the space remains intense.

Sales of firearms declined 4.1% to about 14.6 million in 2025, compared to more than 15.2 million in 2024, according to the National Shooting Sports Foundation, the National Rifle Association’s American Rifleman reported.

ALSO READ: Another American gun, firearm company files Chapter 11 bankruptcy

Analysts said a slowdown in the third quarter of 2025 was a wake-up call, but the slowdown continued.

“Slow demand was expected, but slow reaction is not,” Kaleb Seymour, vice president of data and analytics at Gearfire, told SGB Media. “The third quarter was a wake-up call. The question now is who will adjust before year-end and who will get caught waiting.”

Umbrella Armory, which will be liquidated, was among those crushed by the slowdown.

"Umbrella Armory reported $1,880.63 in cash held in two business checking accounts," according to EdHat Santa Barbara, which shared a number of other facts from the Chapter 7 filing.

• The company’s liabilities include a secured loan of $94,601.40 from the U.S. Small Business Administration, listed through its Office of General Counsel in Los Angeles.
• Unsecured debts include tax obligations to the California Franchise Tax Board and the California Department of Tax and Fee Administration of $6,000 and $470.57, respectively.
• The company also listed $45,000 in credit card debt owed to Bank of America, along with smaller balances owed to Frontier Communications and Warmington Properties Inc. for services and back rent.

Umbrella Armory has stopped selling guns on its website, but it says it's continuing to sell "small parts."

Gun demand has dropped post-pandemic.

“During the pandemic, people were worried about societal collapse in one way or another,” Dru Stevenson, a law professor at South Texas College of Law Houston, told CNBC. “If you didn’t own a gun and you decided you better get one for self-defense, you went and bought your gun, and now you’re done.”

If you buy a product from a company operating under bankruptcy protection, always use a credit card so you can file to have the charges reversed if the item never arrives.

"Filing a dispute on a claim with your credit card is okay, and the bankruptcy court may not have an effect on that. Contacting a company in bankruptcy is likely to do you no good as everything is basically locked in bankruptcy court for now," shared Gino Megna, a bankruptcy attorney in Clearwater, Fla., on Avvo.com.

FBI NICS background checks by year (2010-2024)

Background checks do not directly correlate to guns sold, but are a leading indicator.

• 2010: 14,033,824
• 2011: 16,454,134
• 2012: 19,592,303
• 2013: 21,093,273
• 2014: 20,968,547
• 2015: 23,141,970
• 2016: 27,538,673
• 2017: 25,232,078
• 2018: 26,000,000
• 2019: 28,369,750
• 2020: 39,695,315
• 2021: 38,876,673
• 2022: 31,596,646
• 2023: 29,854,176
• 2024: 28,097,205
  Source: FBI NCIS data

Key firearms industry Chapter 11 bankruptcy filings

A number of gun companies and gun-related brand have filed Chapter 11 bankruptcy.

• Remington Outdoor Company/Remington Arms: Filed July 2020 (second bankruptcy, sold off assets in pieces), according to PacerMonitor.
• National Rifle Association (NRA): Filed January 2021 (attempted Texas reincorporation, case dismissed), PacerMonitor reported.
• Watchtower Firearms, LLC: Filed February 2025 (Northern District of Texas, $10M-$50M assets/liabilities range), according to PacerMonitor.
• Central Florida Firearms, LLC (Live Free Armory): Filed September 2025 (Chapter 11, approx. $12.7M liabilities versus approx. $5.2M assets), reported PacerMonitor.

Not every gun manufacturer has struggled. Sturm Ruger reported an increase in quarterly net sales of 3.6% and a full-year increase of 1.9%, but CEO Todd Seyfert sees challenges ahead.

"As we close out 2025, it is important to recognize the environment we've been operating in. Overall, it was a difficult year for the firearms industry and for consumer durables more broadly," he shared during the company's fourth-quarter earnings call.

He cited many of the same issues impacting other businesses and did not mention the political climate.

"Inflationary pressures, discretionary spending constraints, and a normalization of demand following several historically elevated years have all created headwinds throughout the market," he added.

Related: National radio giant files Chapter 11 bankruptcy