Gun maker Remington is ready to exit Chapter 11 bankruptcy
Remington Outdoor, one of the country’s oldest and largest gun makers, said this week that a bankruptcy judge had approved its reorganization plan, which will transfer ownership of the company to creditors including JPMorgan.
After a court hearing in Delaware, Remington said it expected to emerge from Chapter 11 bankruptcy proceedings by the end of the month with more than $775 million in debt wiped from its balance sheet.
Remington, which sought bankruptcy protection in March after sales fell and its debt piled up, will no longer be owned by the private equity firm Cerberus Capital Management. Instead, some of its creditors, including JPMorgan’s asset management arm, will take control.
JPMorgan and fellow Remington creditors may opt to try to sell the gun company. The bank declined to comment on the creditors’ plans.
Wall Street has started to rethink its close ties with gun makers, especially since the shooting in Parkland, Fla., in February that left 17 people dead and touched off a series of protests and boycotts against companies linked to the firearms industry.
This spring, Citigroup said it would require business customers to restrict certain firearms
sales, while Bank of America said it would stop lending to manufacturers that make military-inspired firearms for civilian use. Other companies, like the investment management firm BlackRock, have asked firearms companies for details about their business practices.
As of February, JPMorgan was a creditor to Vista Outdoor, which this week said it planned to sell its gun manufacturing business and other brands in order to focus on ammunitions and other products focused on outdoor activities.
In a conference call last month, Marianne Lake, JPMorgan’s chief financial officer, said that the company’s links to military-style firearms products “have come down significantly and are pretty limited.”
Concern over gun investments has also come from pension funds. The New York State comptroller, Thomas P. DiNapoli, who oversees the third-largest pension fund in the country, sent letters this spring to the chief executives of nine financial institutions, including JPMorgan, Bank of America and Wells Fargo, asking them to evaluate the risks of being associated with firearms, ammunition and gun accessories.
DiNapoli urged the companies to “explore the operational and financial cost of implementing a system that could reject the purchases of these items in order to ameliorate such risks.”
In recent months, demand for guns — judging from federal background checks conducted at the point of sale, which are considered a rough approximation of purchases — seems to be perking up. Sales had slumped after President Donald Trump’s election.
Cerberus purchased Remington, which is based in Madison, N.C., in 2007 for $118 million, where the gun maker joined other firearms brands, including Bushmaster. But after a Bushmaster rifle was used in 2012 to kill 26 people, most of them young children, at Sandy Hook Elementary School in Newtown, Conn., public anger at Remington drove some investors to try to divest from the company.
Remington is facing a lawsuit from some of the victims’ families in the Connecticut Supreme Court, where a ruling on the case has been delayed until bankruptcy proceedings end. The families’ lawyers have said that the bankruptcy will not shield the company from potential liability.