Remington Returns to Bankruptcy Blaming Falling Gun Sales
(Bloomberg) -- Remington Outdoor Co. filed for bankruptcy for the second time in two years with plans to sell the 200-year-old maker of firearms.
The company said reduced gun sales prevented it from making money even after restructuring its finances in its first bankruptcy. Remington had $437.5 million in sales last year, about half the business it did in 2016, according to court papers filed in Decatur, Alabama.
The company owes various lenders more than $250 million, including a $12.5 million debt to Remington’s home town of Huntsville, Alabama, which put up a loan to help upgrade a manufacturing plant there.
The Chapter 11 filing allows the company to keep operating while it devises plans to turn around the business and pay its creditors.
Remington will continue its hunt for a buyer, which began months before seeking court protection from creditors. The company landed one potential offer for all of its assets, but the unnamed suitor delayed making a final decision after the deal became public, company chief executive Ken D’Arcy said in court papers. The Wall Street Journal reported that the company held talks with the Navajo Nation about a sale, but those discussions fell apart.
D’Arcy said the company is continuing to talk to its unnamed potential buyer as well as others.
Remington went bankrupt before in February 2018. It was felled by too much debt and overstocked gun dealers, who were left with unsold weapons after the surprise loss of Hillary Clinton -- an advocate of gun control -- to Donald Trump in the 2016 election. Cerberus Capital Management had acquired Remington in 2007, and the firearms and ammunition giant accumulated nearly $1 billion in debt.
It emerged from bankruptcy in May 2018, minus more than $775 million of debt, with ownership transferred to senior lenders. This time, Remington is heading back to court even as gun sales revive amid civil unrest in the U.S. The company said it couldn’t take advantage of increased demand because the pandemic disrupted its manufacturing.
In the months leading up to its prior bankruptcy, the company had trouble attracting capital and potential buyers because of the controversy over arms sales. Family members of nine children and educators killed in the 2012 Sandy Hook Elementary School massacre sued Remington over its marketing of the semiautomatic military-style rifle the shooter used. A trial date was set for 2021.
Remington said it continues to fight all the product liability lawsuits its faces.
Law firm O’Melveny & Myers is handling the bankruptcy case, while Akin Gump Strauss Hauer & Feld, is representing Remington’s independent board members who are overseeing the sale process. M-III Partners is the company’s financial consultant and Ducera Partners is acting as investment banker, according to the petition.
The case is Remington Outdoor Company Inc., 20-81688-11, U.S. Bankruptcy Court for the Northern District of Alabama.
To view the docket in Bloomberg Law, click here.
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