According to the filing, at this time, Barry Kahn engaged in illegal activities that would have endangered B&B's licenses and which
later got him locked up in federal prison. The filing further alleges that he bought substantial inventory against Bob Kahn's wishes,
which then had to be liquidated at a loss for $425,000. Bad investments followed, and all the while the company found itself with
increasing legal headaches.
Beyond that, anti-gun legislation by the city has hurt.
"Gun businesses are dropping like flies in the city of Los Angeles," said Chuck Michel, a spokesman for the California Rifle and Pistol
Association and a lawyer who represented B&B in past lawsuits. "They have ridiculous taxes, ridiculous expenses and it's impossible
to find employees to get their permits approved. The simple truth is that they've litigated this store to death, which is what they
always wanted to do."
Two of B&B's past legal difficulties are cited in the filing. A lawsuit filed by various municipalities in 1999, prosecuting various dealers
and manufacturers as contributing to a public nuisance, tied up more funds in legal fees. Last March, agents from the California
Department of Justice raided both of B&B's facilities, alleging that the dealer had defrauded gun buyers.
"B&B believes that these acts were a blatant, premeditated and orchestrated attempt to destroy B&B," the filing reads.
Hallye Jordan, a spokeswoman for the Justice Department, disputed this, saying the department had turned up numerous complaints
that the firm had charged buyers for personal transfers of firearms, a transaction that should be free.
"We got some complaints from consumers that they were being charged these fees, then we did some sting operations where our
agents were overcharged, as well," Jordan said. "We talked to the owners and advised them that was illegal. They were warned,
which is what led to the search warrants being served."
All these factors led the company to file for Chapter 11 protection last August, attorney Jeffrey Shinbrot said, when B&B sought to
reorganize its finances. Things even looked up for a bit, when interest in guns rallied after Sept. 11.
"After the Sept. 11 attacks, the revenues increased dramatically, which made them apparently profitable through the end of October,"
Shinbrot said. "However, the increase in sales diminished and the business was not profitable."