WILMINGTON, Del. (Reuters) – Point Blank Solutions Inc (PBSO.PK), a maker of body armor for the U.S. Army, filed for bankruptcy on Wednesday due partly to legal costs associated with a former chief executive who was indicted for fraud.
The former CEO, David Brooks, was listed as the company’s largest shareholder with a 22.6 percent stake. Brooks was indicted for fraud and related crimes and is currently on trial in New York.
The company has also been investigated by the Securities and Exchange Commission, is the subject of a shareholder lawsuit, and spends about $600,000 a month on legal fees, according to court documents.
“The company is taking this step to improve its future position and we fully intend to honor all of our customer commitments,” said company spokesman Glenn Wiener.
The Pompano Beach, Florida-based company supplies more than 80 percent of the U.S. military’s soft body armor vest requirements, according to court documents. It employs 920.
The company said it had $68 million of assets and $72 million of liabilities, as of Dec. 31.
Point Blank said it had obtained a $20 million debtor-in-possession, or DIP, loan to help fund its bankruptcy.
The company said in its court filing that it had hired Scott Avila of CRG Partners Group LLC as chief restructuring officer to help it in negotiating a going-concern sale.
Other large shareholders include Prescott Group Capital Management and Steel Partners, which is providing the DIP financing, according to court documents.
Shares of the company’s pink sheet stock fell 75 percent to 5 cents per share.
The case is In re Point Blank Solutions Inc, U.S. Bankruptcy Court, District of Delaware, No. 10-11255 (Reporting by Tom Hals; Editing by Steve Orlofsky)