Remington files for Chapter 11 bankruptcy

Dianna Christensen
March 27, 2018

In court papers filed with the U.S. Bankruptcy Court in Wilmington and obtained by SGB Media, the company plans to exit bankruptcy proceedings as soon as May 3.

Ilion Mayor Terry Leonard is hopeful this bankruptcy will just be a restructuring of debt. Experts did say they believed the bankruptcy filing won't derail a decision by the state Supreme Court.

However, the company has no plans to stop making guns, Remington confirmed Monday morning following the formal bankruptcy announcement. Gun enthusiasts traditionally stock up on firearms at times when political winds suggest tighter gun control lies ahead. But the manufacturer's financial woes have been an issue since well before 2017, and the company is not the only gunmaker in America having difficulty in a climate of inconsistent sales and declining stock prices.

The restructuring agreement will allow Remington to reduce some $700 million of its consolidated debt, according to the company, as well as inject a contribution of $145 million of new capital into its operating subsidiaries.

The creditors inked the debt-cutting deal prior to the Parkland shooting, and it is unclear if any have exited.

But legal experts said beyond stopping litigation against the company, the filing raises the question about what unsecured creditors, such as the families, could be awarded should they eventually win a judgment against Remington.

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Remington, which as roots dating to 1816, has lined up $100 million with lenders to continue operations. Third-lien note holders will take 17.5 percent of Remington and four-year warrants get a 15 percent stake.

Remington claims that sales have declined since the 2012 CT massacre at Sandy Hook Elementary School. New York-based Cerberus acquired Remington in 2007 and saddled it with nearly $1 billion in debt. Since 2007, Remington has been owned by private equity firm Cerberus Capital Management, which combined it with several other gun manufacturers to form the so-called "Freedom Group".

No one is saying what will happen to the 3,500 or so employees at Remington as it reorganizes. One class action lawsuit claims the company's triggers are defectively designed and can discharge even if they're not pulled. A similar weapon made by Smith & Wesson was used in the February 14 shootings at Marjory Stoneman Douglas High School in Parkland, Florida.

American Outdoor Brands Corp., the parent of Smith & Wesson, M&P and Thompson/Center Arms, again reduced its guidance for the year due to ongoing challenges in firearms.

The company made its first rifle in 1816 and went on to supply the USA military during both world wars. It now employs 3,500 people and is among the largest American manufacturers of ammunition and firearms.

Other reports by GlobalViralNews

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