The move by the 204-year-old Remington Arms Company came after years of litigation.
By Gillian Friedman
July 28, 2020
The Remington Arms Company, one of America’s oldest and largest gun manufacturers, filed for bankruptcy protection on Monday after years of litigation and a loss of investors took a heavy toll on its finances.
The Chapter 11 filing in the U.S. Bankruptcy Court in Decatur, Ala., is the company’s second restructuring in two years. Remington has been in search of potential buyers and had been in talks with Navajo Nation to acquire it out of bankruptcy, but the negotiations collapsed in recent weeks, leaving the company without a bidder as it goes through reorganization.
Remington Arms was founded in 1816 in upstate New York by Eliphalet Remington II, at a time when most guns in America were crude rifles made by heating and hammering iron strips around a metal rod. Remington believed he could build a better gun than he could buy and began making firearms in his father’s forge. Remington’s firearms were used in the Civil War, World War I and World War II, and remain popular for use in shooting sports and hunting and by law enforcement and the military.
The filing by the company comes as demand for firearms is down, despite a recent uptick in sales during the coronavirus pandemic.
But a slump in gun sales is not what drove Remington to file for bankruptcy, said Adam Winkler, a professor at the U.C.L.A. School of Law who specializes in gun policy.
“Remington’s problem is mostly a problem of Remington mismanagement and not a reflection of larger trends in the gun world,” he said. “I don’t think we’re going to see a whole bunch of gun companies going under now.”
Remington’s troubles date back more than a decade to 2007, when the company was acquired by the private equity firm Cerberus Capital Management.
At first, Remington’s sales surged under Cerberus as demand for guns across the country was booming. But in 2012, 20 children and six adults were killed at Sandy Hook Elementary School in Newtown, Conn., and Remington faced a fierce public backlash after it was reported that the company had manufactured the AR-15-style rifle, the Bushmaster, used by the gunman.
The families of the Sandy Hook victims sued the company, and Remington took on debt, both from paying hefty legal fees and from buying out investors who wanted to divest after a wave of negative public sentiment toward the company.
That debt continued to follow the company for years. The 2018 school shooting in Parkland, Fla., and the ensuing national push for gun control only increased public and financial pressure on Remington, with more big investors and retailers distancing themselves from the company.
Remington’s bankruptcy filing in 2018 allowed it to shed more than $775 million of its $950 million in debt. Ownership of Remington transferred when it exited bankruptcy to some of its former creditors, including Franklin Templeton Investments and JPMorgan Asset Management. The firearms manufacturer continued to struggle to pay legal fees and the high interest payments on its debt, leading the company to a second filing on Monday.
On Tuesday, the Sandy Hook families released a statement expressing concern that Remington would use the bankruptcy process to escape any potential financial liability stemming from their lawsuit.
“Nearly eight years after my sweet little Daniel, along with six adult educators and 19 other first graders, were murdered in their classrooms, Remington must not be permitted to use its bankruptcy filing to dodge responsibility,” said Mark Barden, whose son was killed in the shooting.
