Bankruptcy and Rescue Efforts
While an inability to rapidly modernize its manufacturing capability might have eventually doomed the company, it was the Asian Economic Crisis of the early 1990s that directly brought about the crisis that engulfed Llama. Spanish banks that had extended bad loans in East Asia tried to cover their losses by restricting credit domestically, including to Llama.
Llama filed for bankruptcy in 1992, and in 1993 sixty of its gunsmiths and employees formed a co-operative to buy the Llama name and all of the equipment. These Gabilondo employees negotiated over a protracted period of time and finalized the transfer around 2000.
The cooperative that took over was named Fabrinor Arma Corta y Microfusion, S.A. They moved the factory to Legutiano, and attempted to sell off Llama’s old property holdings. The company began to diversify offering not just handguns but precision parts made by investment casting.
The main problem with the new group was sales were not rising fast enough to cover the old debt they inherited from Llama. Fabrinor was able to reschedule the debts in 2002 and again in 2003, but even public listing on the stock market didn't help generate the funds required.
Thanks to regulatory intervention, Fabrinor was compelled to call a special shareholder meeting on January 12, 2005, to reveal fully to shareholders the company's financial situation, its plans to restructure into a limited partnership, and the latest plans to reschedule its inherited debts. The plans were rejected and the plant in Legutiano was closed.
Star (Bonifacio Echevarria S.A.) had gone under in 1993, its assets sold to rival Astra (Esperanza y Unceta, later Societa Unceta y Cia, then Astra-Unceta y Cia, finally Astar S.A.), which in turn collapsed completely in 1997. With the long lingering collapse of Fabrinor, the ruling post-depression triumvirate of Spanish pistol makers came to an end.
Read more about this topic: Llama Firearms
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—Henry David Thoreau (1817–1862)
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