Amid declining demand and liquidity problems, gun maker Colt Defense has hired a restructuring adviser.

The company announced it was hiring Mackinac Partners as restructuring adviser, and senior managing director Keith A. Maib as chief restructuring adviser, on March 11.

Colt, headquartered in West Hartford, Connecticut, designs, develops and manufactures firearms for military, personal and recreational use. The company's founder, Samuel Colt, patented the first commercially-successful revolving cylinder firearm in 1836.

Colt says that it started having liquidity restraints during the third quarter of 2014 because of "recent business trends" that have affected the company's bottom line. "These trends included the continued decline in market demand for the company’s commercial modern sporting rifle, recent declines in demand for the company’s commercial handguns and delays in anticipated timing of U.S. government and certain international sales," Colt says in an SEC filing.

On Feb. 9, Colt got a $33 million loan from Cortland Capital Market Services. The deal includes cash collateralized letters of credit of up to $7 million. The loan has a fixed interest rate of 10 percent and matures Aug. 15, 2018. Colt planned to use about $5 million of the proceeds to repay its revolving credit facility with Wells Fargo Capital Finance LLC, and use the rest for additional liquidity, and other things, the company says in a filing with the U.S. Securities and Exchange Commission.

Colt has a $10.9 million interest payment due on its senior notes on May 15, which it says it may not have enough money to make, even after the new loan. Because of that, and other payments that the company may not have the money to make, Colt raised substantial doubt about its ability to continue as a going concern, or without the threat of liquidation.

In order to handle the liquidity problems, Colt planned to grow revenue across sales channels, reduce costs, work with U.S. government regulators to get international sale approval and restructure the company's debt to reduce debt-service costs.

The company posted an asset decline between Dec. 31, 2013 and Sept 28 – listing about $265 million in assets for 2013, and at $246.5 million as of Sept. 28.

For last week's Turnaround Tuesday column, see After Failed Merger, Dune Energy Tries a Bankruptcy Auction. 

For more troubled companies, see Mergers & Acquisitions Distressed Company Watch List.