[Lightsped]

This does not apply to me, but I was wondering what would happen if a Class 3 dealer went out of busioness. Where would the customer's firearms in his/her possession that are awaiting ATF approval go?

[Liko81]

If a business that deals in Class 3 weapons goes under, one of two things will happen; the assets will be bought by one or more other Class 3 dealers who will then handle the transaction to completion, OR the guns will be claimed by the ATF, who will probably not complete the transactions themselves, and may or may not compensate customers who have paid money for those guns and are waiting for paperwork.

[AntiqueCollector]

Title Two weapons can only be possessed by the person in whose name they are registered (though obviously they can allow others to use them for lawful purposes) so the dealer can not keep the weapons when the paperwork goes through, if that is what the original poster is concerned about. Except for post-86 machine guns, however, a dealer may certainly keep them if he is the registered owner, and then they can be sold through private sales, if he is no longer an FFL.

[Lightsped]

I was asking about a situation that could go like this. Suppose someone has paid for their class 3 firearm. He submits his paperwork to the ATF. During this period of waiting, a FFL would be in possession of the firearm. Now suppose the FFL goes out of business before the ATF paperwork is returned to the buyer.

What happens to the gun?

[DoubleTapDrew]

I don't think the dealer ever owns the gun. Buyer pays the seller, buyer is now the owner. He just can't be in possession of it until he gets his stamp back. I don't think the ATF can confiscate them if everything is legit, but who knows. I doubt all of those guns in their toy room belonged to scarface or joe meth-dealer.
I've also wondered what happens if the buyer's form 4 is rejected after paying for it and the dealer is in posession.

[Chipperman]

I don't think the dealer ever owns the gun.

It depends. If you buy an MG from someone out of state, it gets transferred to a Form 3 by your dealer. While on a Form 3, your dealer legally owns the gun. Although you have paid for it, it's not legally yours until the Form 4 is done.