Economy

Legendary Gun Manufacturer Remington Files For Bankruptcy

Legendary Gun Manufacturer Remington Files For Bankruptcy

The owners of debt-laden Remington, which has made guns for over 200 years, filed for bankruptcy protection in Delaware, Michigan. As I'm sure I've mentioned here over the years, I grew up barely five miles from the main, original plant in upstate NY and used to ride my bike past there regularly when the weather was good.

But like other gun manufacturers, it has struggled in recent years with lagging sales, profits and share prices.

But legal experts said beyond stopping litigation against the company, the filing raises the question about what unsecured creditors, such as the families, could be awarded should they eventually win a judgment against Remington.

The bankruptcy filing allows Remington to stay in business and keep making guns while restructuring its massive debt.

In sum, the plan is created to reduce approximately $700 million of Remington's debt and support the contribution of $145 million of new capital into Remington's operating subsidiaries, markedly strengthening the company's consolidated liquidity, balance sheet and long-term competitiveness.

In addition to its heavy debt load, Remington has seen sales drop since the election of Donald Trump as president. It has been common for gun sales to increase under Democratic regimes and ebb under Republican regimes due to perceived likelihood of gun control measures. Throughout the bankruptcy proceedings, I have been in close contact with Remington's team.

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But the slump is more of a market correction, according to Brian Rafn, a gun industry analyst with Morgan-Dempsey Capital Management, LLC, who pointed out that the surge of gun sales during Barack Obama's presidency was bound to "come back down to earth".

"I still think Remington's bankruptcy is not only reflective of the overall downturn in the firearms market over the past 16 months, but also the particular difficulty that producers of modern sporting rifles have been seeing during this same time", he added.

Remington's financial issues are also tied to the difficulty the company has had running its Huntsville, Ala., manufacturing plant that opened in 2014, the partner noted.

Remington first announced that it would file for bankruptcy protection on February 12, but the Parkland shooting two days later in which 17 people died may have delayed the proceeding. The young man who killed 20 first-graders and six educators in the Sandy Hook shooting in CT in 2012 used a Bushmaster.

Families of the Sandy Hook victims sued Remington, claiming the manufacturer bore some responsibility for the attack.


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