Cody-Based Gunwerks Says it has Settled Wells Fargo Lawsuit
The Cody-based maker of high-end custom rifles Gunwerks responded early Friday evening that Wells Fargo Bank's assertions in a lawsuit filed Wednesday demanding $2.8 million in defaulted loans were untrue, and the dispute has been resolved, according to a prepared statement from its chief executive officer.
K2 Radio News published a story about the lawsuit on Wednesday evening after Gunwerks did not respond to repeated requests for comment.
"The Wells Fargo narrative of Gunwerks’ financial distress was untrue," CEO Aaron Davidson said in a statement posted on the company's website.
"The dispute was never about Gunwerks’ financial condition or late payments, but about a difference of opinion on asset valuation. Within days of filing the suit, it has been settled and the case will be dismissed immediately," Davidson wrote.
On Wednesday, Wells Fargo and Wells Fargo Equipment Finance, Inc., filed a complaint and a motion for a receiver to assume the company's equipment and inventory as collateral for the loans, according to documents filed in Wyoming U.S. District Court.
However, the lawsuit filings did not discuss the company's current relationship with the Wyoming Business Council, which in September 2018 recommended Gunwerks' request for a $3 million grant and a $3 million loan package to expand its manufacturing facility. The next month, the State Loan and Investment Board -- comprised of the state's top five elected officials -- approved the request. The new facility would be owned by Cody economic development organization Forward Cody and leased to the company.
Representatives of the Wyoming Business Council and Forward Cody did not return calls, either.
At 5:59 p.m. Friday, a representative of Gunwerks sent Davidson's response to K2 Radio News. See the company’s full statement below:
"Cody, WY – May 22, 2020
"The reports of Gunwerks’ demise are completely false. In fact, we’re crushing it! So far, 2020 has set records for sales performance and profitability, and it only gets better from here!
"This week’s report of Wells Fargo filing a lawsuit has gotten a lot of attention. The bottom line is, the litigation has been settled, the entirety of our Wells Fargo operating loan has been paid off, and it is business as usual for Gunwerks.
"The Wells Fargo narrative of Gunwerks’ financial distress was untrue. The dispute was never about Gunwerks’ financial condition or late payments, but about a difference of opinion on asset valuation. Within days of filing the suit, it has been settled and the case will be dismissed immediately.
"Most of the stories circulating around the social media landscape are just wrong! Here are two good examples: In Wells Fargo’s narrative complaint filed in federal district court, they assert that Gunwerks was delinquent on sales tax payments. This is not true now and has never been true (Check here for a list of current delinquents in WY). They also allege that Gunwerks is late paying vendors. Again, this is untrue. We pride ourselves in dealing fairly with our vendors.
"Unfortunately, despite our numerous good faith attempts to resolve the issues with Wells Fargo, the bank chose to file a lawsuit, which has now been settled. Fortunately, we had the resources to pay off the credit line within two business days of Wells Fargo filing suit. Our customers have really supported us this year with record sales. We’re on track to have our best performing year on record.
"In 2020 Gunwerks will be announcing several new and innovative products that have been in development the past several years. Keep an eye out for an entirely new, next-gen rifle system engineered from the ground up, at least three more Skunkwerks projects, and new optics products and ballistic solutions in the Revic lineup.
"The damage to Gunwerks’ reputation from Wells Fargo’s lawsuit will take quite a while to overcome, but with our team and a foundation of innovation and product quality, we see this as a minor incident. We’ve never been more excited about our business!
"Aaron Davidson, CEO Gunwerks"
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