Sandy Hook families aim to stake claim in Remington’s bankruptcy
NEWTOWN – A longshot plan by nine Sandy Hook families to challenge Remington’s bankruptcy sale next week is not the first time odds have been against them in their six-year battle to hold the gunmaker liable for Connecticut’s worst crime.
Since the day families filed the wrongful death lawsuit against the maker of the AR-15-style rifle used in the 2012 massacre of 20 first-graders and six educators at Sandy Hook School, the families’ underdog status against the firearms giant has been partly why their case has kept a high profile.
After victories in Connecticut Supreme Court and U.S. Supreme Court, however, the families’ made headlines because their longshot lawsuit was looking more like a landmark lawsuit.
But now Remington is a shell of its former self – seeking bankruptcy protection for the second time in as many years – and the Sandy Hook families are fighting against time to salvage their gains in trial court to uncover the gunmaker’s marketing data.
“The families are concerned that a quick sale will leave no funding to allow for (lawsuit) claims to be liquidated and/or proceed against applicable coverage, amounting to a substantial windfall to insurers and potentially leaving millions in collectable funds on the table,” the families’ lawyers argued recently in federal bankruptcy court in
Alabama.
At stake for the nation’s oldest gunmaker is an urgent need for cash to stay in business, according to Remington’s court papers. The plan is to sell its $65 million ammunition division as soon as possible. One of the bidders is Fairfield-based arms maker Sturm Ruger.
The Sandy Hook families object to the sale because Remington left them off a list of the company’s top 40 creditors who would be paid once a bankruptcy agreement is complete.
It wasn’t an accident, Remington lawyers said in an Aug. 14 court response to the Sandy Hook families.
“[T]he budget for (Rem
ington’s) use of cash collateral, which was heavily negotiated between (Remington) and their prepetition senior secured lenders, is not sufficient…” to include other creditors, Remington’s lawyers wrote.
That sets the stage for a sale hearing on Tuesday in Alabama, where lawyers for the Sandy Hook families will argue that Remington enjoyed substantial profits from the booming firearms market during the first six months of 2020, and is only seeking an accelerated sale in bankruptcy court to run from its lawsuits.
The families will use testimony and evidence lawyers requested from Remington last week, after the judge ordered Remington to turn over insurance and financial information from the last two years to
the families’ attorneys.
“As the families have repeatedly stated, they believe (Remington is) pursuing a sale process that has been intentionally designed to repay their prepetition secured debt by selling substantially all of their assets free and clear of certain prepetition liabilities, such as tort, wrongful death and other product liability claims, while providing for the assumption of all or substantially all of (Remington’s) ordinary course operating liabilities,” the families’ attorney, Tazewell T. Shepard IV, wrote to the bankruptcy court judge on Sept. 1. “[T]his may constitute an abuse of process that would warrant, at a minimum, denial of the sale.”
Remington attorneys in Alabama and Connecticut did not return calls for comment on Friday.
In court papers, Remington argues that the Sandy Hook families’ challenge is premature, because the winning bidder and the terms of the sale are not yet known.
The families’ lawyers in Alabama and Connecticut declined to comment about the hearing on Tuesday.
In court papers, the families’ attorneys said they are “committed to pursuing their claims, and will pursue (Remington’s) estates and all available insurance coverage, whether or not the sale is approved.”