From http://www.theoutdoorwire.com/

The Outdoor Wire has learned that U.S. Bankruptcy Judge Robert J. Kressel granted several early motions in the Dakota Arms Chapter 11 bankruptcy case at a preliminary hearing held yesterday in Minneapolis, Minnesota.

Dakota Arms requested permission to honor obligations to its employees for their salaries and benefits and the treatment of deposits paid to Dakota for ordered firearms as being held "in trust" rather than being regular proceeds of business.

Judge Kressel has granted both motions.

Examining the filings also gives a basic explanation for the Dakota Arms decision to ask for Chapter 11 protections. According to documents filed in the proceeding, Dakota Arms was apparently forced to the courts after First Western Bank of Sturgis, South Dakota, accelerated a demand for payment of a temporary advance following Dakota Arms' failure to meet the repayment deadline. According to court documents, say the failure to make the payment of principal and interest was due not receiving an anticipated "large receivable" in time to make the deadline.

After that failure, First Western placed all Dakota Arm's credit lines in default and demanded payment in full of all credit facilities.

Dakota Arms says the repayment of those credit facilities would have, in effect, caused the company to fail. On July 5, 2006, the bank came to Dakota Arms facilities and demanded immediate turn-over of all its collateral.

Dakota Arms refused to comply; the legal rhetoric escalated, and Dakota filed the Chapter 11 case.

With the granting of these several motions, it would seem Judge Kressel believes Dakota Arms to still be a viable company, consequently granting the "debtor in possession" status, in effect, allowing the company to continue normal operations, although under Bankruptcy Court supervision.

Dakota Arms currently continues its operations for its Sturgis, South Dakota manufacturing plant, employing 46 people. Founded in 1972 by the late Don Allen, a controlling interest was acquired by three venture capital funds in 2003.