Gunmaker Remington Outdoor has gone through its second Chapter 11 bankruptcy filing in two years. The company is short on funds despite unloading $775 million in debt in its 2018 bankruptcy. Remington, which is based in Huntsville, Ala., filed for Chapter 11 bankruptcy protection again in July of this year.
The Remington Arms Company is one of the oldest and largest gun manufacturers in the U.S. Founded in 1816, the company made firearms that were used in the American Civil War, World War I, and World War II. A bankruptcy auction is parceling off parts of the company to various buyers, which will be reviewed for approval in a formal hearing on Nov. 24.
Why did Remington file for bankruptcy?
The New York Times reported in July that Remington’s decline isn't due to an overall decrease in gun sales. Instead, the decline is mainly due to company mismanagement. Adam Winkler, a professor at the UCLA School of Law and a gun-policy expert, said that the company's bankruptcy doesn't indicate larger gun world trends.
Remington’s 2018 bankruptcy came after years of struggles including litigation brought by families of the victims of the 2012 Sandy Hook shooting. In 2012, 20 children and 6 adults were killed at an elementary school. The shooter used a Remington-made Bushmaster rifle.
The costs related to that lawsuit, both from financing legal counsel and having to buy out investors, damaged the company’s finances. It isn't clear how the second bankruptcy will impact the Sandy Hook lawsuit or Remington retirees concerned about losing benefits.
The lawsuit was preserved through the 2018 bankruptcy, but the new bankruptcy has halted the motion on that suit. Families who lost loved ones in the 2012 shooting released a statement in July that the company shouldn't be allowed to escape financial liability by filing for bankruptcy.
Remington has struggled to regain traction despite an uptick in demand for firearms during the COVID-19 pandemic.
How is Remington changing?
Various segments of the Remington company and brand have been sold off to seven different buyers in a multi-day auction, according to Fox Business. The combined sales from the parcels will bring in $155 million to help the company pay off its outstanding debt.
So far, the largest purchase from the bankruptcy auction looks to be from Vista Outdoor Inc., which made the winning bid of $81.4 million to buy the Lonoke ammunition business. The Motley Fool said that the Remington brand will be in “good hands” with Vista as the buyer.
Will Remington products still be available?
Remington products will continue to be manufactured and sold under the purchasing entities' management. For example, Lonoke ammunition will be available to buyers through Vista Outdoor.
Other parts of the Remington business and brand and their buyers within the auction include:
- Sportsman’s Warehouse purchased the Tapco brand.
- Nevada’s Franklin Armory Inc. purchased the Bushmaster brand.
- Sturm Ruger & Co. purchased part of the weapons business for $30 million.
- Roundhill Group LLC purchased elements of the firearm manufacturing operation for $13 million.
- JJE Capital Holdings LLC purchased H&R, Parker, and several other firearm brands.
- Sierra Bullets Inc. of Missouri purchased another part of the ammunition business for $30.5 million.