Gunmaker Remington files for Chapter 11
Madison, N.C.-based company began in 1816
Remington, one of the nation’s oldest gun manufacturers, filed for bankruptcy court protection late Sunday amid heavy debts, falling sales and the potential for adverse court rulings stemming from the 2012 Sandy Hook school massacre.
Remington Outdoor and its subsidiaries submitted a Chapter 11 petition to federal bankruptcy court in Delaware, outlining a restructuring plan that would maintain company operations, continue pay and benefits for employees and ultimately turn operating control of the company to creditors.
The agreement would end the controlling financial interest of Cerberus Capital Management, the private equity company that acquired what was then known as Remington Arms, for $118 million in 2007. Cerberus unsuccessfully tried to sell the company before the decision to seek bankruptcy
protection.
Madison, N.C.-based Remington, a maker of shotguns, rifles and handguns since 1816, listed liabilities between
$100 million and $500 million, with an identical estimate of assets. Billed as “America’s Oldest Gunmaker,” the company’s brands include Remington, Bushmaster Firearms and DPMS/Panther Arms.
Remington initially announced the pre-agreed bankruptcy plan on Feb. 12. But the actual filing was delayed after the Feb. 14 mass shooting that killed 17 people at Marjory Stoneman Douglas High School in Parkland, Fla.
The deal announced in February said Remington would be able to write off
$700 million of $950 million in estimated debt. The agreement would also provide $145 million of new capital for its operating subsidiaries and provide
$100 million in creditor-funded money as a debtor-in-possession term loan, the company said at the time.
Stephen Jackson, Remington’s chief financial officer, said in a bankruptcy declaration that the company and its subsidiaries have held leading U.S. market positions in a variety of firearms and ammunition categories since 2008 — including sales to military and law enforcement agencies.
However, along with the company’s debts, he cited a series of financial setbacks over roughly the last one-year period. Remington increased production rates during 2016, based on expected consumer demand in 2017, but that demand “ultimately did not materialize,” Jackson stated. Remington borrowed to ramp up production to meet expected sales that fell below expectations.
Although Remington negotiated for minor borrowing relief, “the overall business and industry environments continue to cause significant financial hardship, ”Jackson added.
In interviews Monday, some independent gun dealers said they were unsurprised by the bankruptcy filing. Al- though Remington’s rifles and shotguns are well regarded, the dealers said the company focused its attention on big-box stores, and then those retailers started pulling out of the market. “Remington bet on the wrong horse,” said Justin Anderson, the marketing director for Hyatt Guns in Charlotte, which advertises itself as the nation’s single-largest gun store. “They turned their backs on shops like ours.”
Remington’s reputation and financial outlook took a hit after law enforcement authorities confirmed that Adam Lanza used one of the company’s Bushmaster XM15-E2S guns in the Sandy Hook Elementary School massacre in Newtown, Conn. Lanza killed his mother and then fatally shot 26 children and educators.
Survivors and families of the victims sued Remington. After litigation in federal court, the Sandy Hook plaintiffs made it to the Connecticut Supreme Court, where both sides await a ruling.