This seems weird to me too, so I did some reading. Colt has a monster load of debt ($300MM). As a result, it makes money only in boom years like 2009, 2013. It loses money in slow years like 2010, 2012. In the last five years Colt has, in total, made close to no money.
They lost the M4 contract in 2013. Civilian AR sales have plunged. International sales are still doing okay for them.
They are overwhelmingly dependent on the M4/AR15 rifle. Everything else, including handguns and machine guns, is a small part of sales.
Looks like a very bad business, financially speaking. I imagine bankruptcy will put them out of the running for US govt contracts, for some years. Maybe they figure since they just lost the M4 five year contract and there is no real momentum toward a new US military rifle (
AFAIK), this is a good time to go BK and cut the debt. If Colt had no debt, it would be profitable even in the slow years.