Howell Munitions filing for bankruptcy protection

Howell Munitions & Technology in Lewiston has voluntarily filed to re-organize under Chapter 11 bankruptcy after the company's founder allegedly wrestled back control of the business from a lender.

The company has faced financial challenges that forced reductions in employees and created a conflict with a lender, Zions First National Bank, according to court documents filed in U.S. Bankruptcy Court in Nevada late last week.

The business has about $5.4 million of unsecured claims from its 20 biggest creditors, according to the bankruptcy.

Among them are $3.59 million to P Kay Metal, a California lead supplier that just opened a Lewiston location, $118,000 to Bitterroot Security & Inv. LL in Clarkston, and $57,985 to Collier Electric in Clarkston, according to the documents.

What the bankruptcy means for the business' employees is not clear. Attempts by the Tribune to reach representatives of Howell Munitions & Technology on Monday were not successful.

Zions had no comment Monday because the bank hadn't had sufficient time to review the documents, said Ali Hardy, a spokeswoman for the bank. But in the bankruptcy filing, a Zions attorney stated the bank will seek to have it dismissed.

The bankruptcy filing by Howell Munitions & Technology explains how the company operates and its version of what led to its problems.

David Howell owns 95 percent of the issued and outstanding shares in Howell Munitions & Technology, which is the sole shareholder in X-Treme Bullets, Clearwater Bullet, Ammo Load Worldwide and Howell Machine.

X-Treme is in Carson City, Nev., and Clearwater Bullet is in Lewiston. Both businesses manufacture bullets that are sold wholesale and to online customers.

Ammo Load Worldwide manufactures ammoload machines and other machines in Lewiston that are sold to third-party customers. Howell Machine in Lewiston makes parts for those machines and other equipment.

Howell Munitions & Technology owns 100 percent of the membership interests in Freedom Munitions, which sells ammunition.

David Howell owns the majority of the membership interests in Components Exchange and in Lewis-Clark Ammunition Components.

Components Exchange in Peck manufactures and assembles ammunition and sells ammunition and components to wholesale and online customers.

Lewis-Clark Ammunition Components is no longer in business, but owns machinery and equipment.

Howell Munitions & Technology, X-Treme Bullets, Clearwater Bullet, Ammo Load Worldwide, Howell Machine, Freedom Munitions, Lewis-Clark Ammunition Components, Twin River Contract Loading, Big Canyon Environmental and David Howell received a revolving loan and four term loans from Zions First National Bank in November 2014, according to a declaration from David Howell in the bankruptcy filing. Twin River Contract Loading and Big Canyon Environmental are not part of the bankruptcy.

Later, a fifth term loan was issued.

"In 2016, the borrowers failed to comply with certain financial covenants contained in the bank loan agreements," according to Howell's declaration. "Moreover, the revolving loan became due on July 26, 2016, and the bank declined to extend the revolving loan. The bank alleges an outstanding balance owed by the borrowers in the approximate amount of $16.7 million."

In response in 2017, the companies liquidated a significant amount of inventory, "undertook two significant reductions in their workforces" and reduced other operating expenses, according to Howell.

In April, the relationship between the companies and Zions worsened, with Howell stepping aside as president or managing member of the companies and the bank appointment of a chief restructuring officer, according to Howell.

The bank-appointed chief restructuring officer "had no knowledge" of the companies as he closed business operations, terminated employees and pursued the sales of assets, according to Howell.

"By reason of the negligent and ill-advised acts taken by the bank-appointed (chief restructuring officer), substantial damage has been done to the operations" of the companies involved in the bankruptcy, according to Howell.

On Thursday, just a day before the bankruptcy filing, the companies involved in the bankruptcy "terminated" the bank-appointed chief restructuring officer, according to Howell.

The former senior management was reappointed, led by Howell as president, and the companies involved in the bankruptcy have employed a financial turnaround expert, according to Howell.

Howell stated in court documents that he believes that if the bank-appointed chief restructuring officer had stayed, the company's "financial affairs ... would be impaired greatly, if not destroyed."

Zions takes issue with what happened Thursday, its attorney stated in a court document. "The principal of the debtor, David Howell, used unauthorized force to displace a pre-petition chief restructuring officer from the principal place of business for this debtor's business enterprise in Lewiston ... and turned around and filed a series of bankruptcy cases ... in Nevada without legal authority to do so."

Williams may be contacted at ewilliam@lmtribune.com or (208) 848-2261.