Kalashnikov USA Files for Bankruptcy, Will Likely be Bought

After months of financial troubles and a PR debacle that lasted over a year, Kalashnikov USA (KUSA) has shuttered its business and filed for Chapter 11 Bankruptcy. But instead of liquidating its assets and closing entirely, it appears as though KUSA may be acquired by another company. Here’s the story of KUSA’s bankruptcy and a look at who some of the company’s potential buyers could be.

An AK-103 and PP-19-01 Vityaz, which KUSA was known for building.

What is Kalashnikov USA (KUSA)?

Before we get too deep into the weeds here, let’s introduce the main character of our little drama: Kalashnikov USA.

Origins and Early Developments

Kalashnikov USA, also known as “KUSA,” is one of the main American builders of AK-platform rifles. The company is well-known among the AK community for its KR-103 series of rifles, as well as the KP series. AK nerds like this thing because it’s the only true American-made clone of the Russian PP-19-01 “Vityaz” submachine gun.

KUSA was founded in 2011 as an exclusive importer for Kalashnikov Concern. Also known as the Kalashnikov Group, this Russian company currently owns the intellectual property rights to the AK platform. It also builds AK-pattern guns in Russia for both the government and private citizens.

However, that relationship ended in July 2014. That year, the Obama administration sanctioned Kalashnikov Concern and other Russian defense companies to punish Russia for its invasion of Crimea.

No longer able to import guns, KUSA began building their own rifles based off of Russian designs. For a while that went pretty well, and the company garnered a reputation for building a solid AK-pattern gun.

Jesse James Takes Over

Fast forward to 2021. KUSA’s well-respected CEO, Jonathan Mossberg, had just resigned for his new gig at PTR Industries.

At that point, notorious entrepreneur and reality TV star Jesse James took over running the company. Although he’s better known for building motorcycles, James is also an avid firearms enthusiast. This was about the time that people who bought KUSA’s guns noticed a dip in KUSA’s quality control. As a result, many of the company's former fans began to change their opinions of KUSA.

Another move that alienated the company from its consumers was hiring James' wife, Alaina Antoinette James, to the KUSA marketing team. Alaina James is an adult actress better known by her stage name Bonnie Rotten.

Don’t think I’m judging Alaina James for her previous career in sex work. She seemed to be bad at her actual job – seeming to know little about firearms and causing several PR gaffes. Undaunted, KUSA continued to use her as a PR spokesperson and even sponsored her as a competitive shooter.

She left the company sometime over the last few years, and has also filed for divorce with Jesse James.

KUSA Bankruptcy

Okay, so this brings us to the present day. Here’s the lowdown on KUSA’s current financial situation.

First Signs of Financial Trouble

The first sign that KUSA was in serious trouble happened three weeks ago. A user on Reddit first broke the news that KUSA had initiated mass layoffs, and that one of their friends had lost their job.

Kalashnikov USA mass layoffs?

byu/akbuilder inak47

Instagram user AKqualityenforcement (a known associate of KUSA) confirmed the information in an instagram post:

Firing all your employees and closing up shop is generally a sign that a business is doing poorly. Rumors swirled for weeks. This wasn’t the first time that KUSA was rumored to have financial woes, though, so many observers took the online posts with a grain of salt.

KUSA Files for Bankruptcy

That all ended when a court filing confirmed the hearsay. On May 6, 2024, KUSA filed for bankruptcy under its legal name, “RWC, LLC.” According to court documents, KUSA has over $38 million in debt.

This isn’t the first time that KUSA has experienced cash flow problems. The company has previously secured loans to continue operation. But after missing two separate $40,000 repayments (on February 1 and March 1, 2024) KUSA is out of options – it must repay its debt somehow. Now, the company has to go to court to figure out how to do that.

It’s important to note that KUSA is filing Chapter 11 bankruptcy. This means that the company wants to restructure its debts in order to continue functioning on some level. That’s in contrast to a Chapter 7 bankruptcy, which would mean the company is selling all of its assets and going out of business.

A New Buyer Appears?

For the next few days, owners of KUSA guns panicked. Who would they send their guns to for warranty claims? Where would they be able to buy replacements for worn out parts? And does this mean the end of the American-made Vityaz?

Then, an industry insider posted on AK Files, one of the biggest online AK message boards, with new information. The insider, Atlantic Firearms, said that KUSA had found someone to pay off their debts to buy the company. Although KUSA does have a ton of debt to repay, it also has plenty of assets.

Online gun retailer Atlantic Firearms lets the cat out of the bag.

For example, it has the only turnkey Vityaz assembly line in America (and the only one outside of countries sanctioned over the Russo-Ukrainian war). The company also has tools required to make other AK-pattern guns. It even has its own line of 7.62x39 ammo, which has exploded in price since the 2022 Russian Ammo Ban.

Potential buyers for KUSA include:

• Palmetto State Armory (PSA): Here’s a name that’s well-known throughout the American gun industry. PSA is famous for making affordable rifles and pistols, and they’ve become darlings to the AK community for guns like their new 5.56 “Krinkov.” This seems like one potential buyer for KUSA.
• Atlantic Firearms: The industry insider that first mentioned KUSA had found a buyer online. Atlantic Firearms themselves could be that buyer, and the company is trying to keep the info under wraps until the deal is finalized.
• Creed Monarch: Other posters in the AK Files thread said that KUSA’s owners were somehow affiliated with Connecticut-based manufacturing firm Creed Monarch. The company is a precision manufacturer of CNC-machined components.

However, KUSA’s buyer could be a different company entirely. Simply put, we won’t know who KUSA’s buyer is until an official announcement.

The Big Picture

Okay, we just covered a lot of ground here. Let’s recap recap:

What we know:

• KUSA has filed bankruptcy.
• It’s Chapter 11 bankruptcy. This means KUSA wants to restructure its debt instead of completely liquidating (selling) its assets.

Rumors we have heard:

• There’s a buyer lined up to purchase KUSA and help them pay off their debts.

We’re still very much in the middle of the KUSA situation right now, and the situation is definitely going to develop further. We’ll observe the situation and report back as it changes. Stay tuned!