Judge: Gun firm sale will not harm lawsuit

Sandy Hook families fight for standing as creditors of Remington

NEWTOWN — A federal judge overseeing Remington’s $159 million bankruptcy sale on Tuesday assured nine Sandy Hook families who are suing the gunmaker that some of the sale proceeds will be dedicated to keeping the gunmaker’s insurance intact.

“I’m prepared to approve this sale, and at a future status conference work out the distribution of the funds, including the issue about insurance that the Sandy Hook families are raising,” Judge Clifton Jessup said.

Jessup’s approval, which he expects to enter on Wednesday, represents a victory for the Sandy Hook families, who have been fighting to preserve their wrongful death lawsuit since Remington filed for Chapter 11 protection and left the families off its list of creditors.

The judge’s approval also means a victory for Fairfield-based Sturm Ruger, which has successfully bid

$30 million for Remington’s Marlin firearms business. Six other companies have successfully bid on other pieces of the country oldest firearms manufacturer.

Remington began the hearing on Tuesday by promising it would keep its insurance policies and documents related to the Sandy Hook lawsuit intact if the judge approved the Chapter

11 sale.

But under cross-examination by Sandy Hook families’ lawyers, a key Remington bankruptcy consultant admitted he had neither reviewed the company’s insurance coverage nor computed costs related to preserving and producing marketing records Sandy Hook families have the right to examine as part of the pretrial process in Connecticut Superior Court.

That didn’t sit well with the families.

“(Remington) has provided us assurance they are not selling the insurance policies but that does not address our concern that these policies will be usable after the sale,” said Faith Gay, one

of the attorneys representing Sandy Hook families in bankruptcy court in Alabama. “This is simply essential that these values are maximized — without it, hundreds of millions of dollars may well be impaired.”

Remington, which assured Jessup that he should approve the sale over the objections of the Sandy Hook families, argued its insurance coverage and internal marketing documents will not be sold or otherwise neglected.

“These are not issues for today… but issues for later down the road,” said Remington attorney Gary Svirsky, during a virtual hearing. “We have made it clear that the policies are not to be sold … and the litigation isn’t going to being transferred.”

The litigation in question is the wrongful death lawsuit brought six years ago by nine families who lost loved ones in the shooting of 20 first-graders and six educators at Sandy Hook School in 2012.

The families charge that Remington violated Connecticut’s Unfair Trade Practices Act by recklessly marketing an AR-15 rifle to the civilian market that was used by the Sandy Hook gunman.

Remington counterargues that it manufactured a legal firearm that was misused by a criminal.

The families have had the momentum after back-toback victories in Connecticut Supreme Court and U.S. Supreme Court.

Meanwhile, Remington has been losing money every quarter since 2018, including a loss of $40 million in the first six months of 2020, according to documents introduced in court Tuesday. If that seems unlikely at a time of uncertainty in the United States when the gun industry is booming , it is.

Now in its second bankruptcy in as many years, Remington has been unable to climb out of debt it took on after 2012, when investors who didn’t want to be associated with the Sandy Hook shooting left.

The first good news the company has had for a long time came last week, when the bidding war drove up the sale price from $65 million to $159 million.

Remington’s attorney said that should be good news for the Sandy Hook families’ wrongful death claim.

“This sale has delivered considerable value to Remington,” Svirsky said. “(Remington has) more money than it did before the sale, and that means more money now for everything.”

Sandy Hook families’ said they’ll believe it when assurances were built into the sale agreement.

“If (Remington) cannot assure the court they will preserve these assets … the sale should not be approved,” Gay said.

Jessup spent the last part of Tuesday’s hearing setting up a meeting in October to be sure the families’ concerns are addressed.

“At that conference, we’ll discuss the status of the sale and how the sale will impact the insurance policies … for the benefit of the Sandy Hook families the other creditors,” the judge said.