Remington files for Chapter 11 bankruptcy
The announcement came yesterday: Remington Outdoor Company announced a Restructuring Support Agreement with creditors for a Chapter 11 bankruptcy that will allow the company to remain operational
Remington, America's oldest gunmaker, announced a Restructuring Support Agreement with creditors and a Chapter 11 bankruptcy
Important mainstream media such as Reuters, CNN, Bloomberg, Fortune, as well as specialized outlets like The Truth About Guns, are breaking out the news after the first information was leaked about one week ago: following several days of talks, the Remington Outdoor Company announced yesterday that a Restructuring Support Agreement was reached with creditors.
The RSA paves the way for a Chapter 11 bankruptcy procedure. For those unfamiliar with the United States Bankruptcy Code, the Chapter 11 bankruptcy procedure allows the debtor company to propose a plan of reorganization to keep its business alive and pay creditors over time. And as a matter of fact, Remington's business operations will continue to operate in the normal course and will not be disrupted by the restructuring process. Payments to trade partners, employee wages and other benefits, support for customers, and an ongoing high level of service to consumers will continue without interruption.
Founded in 1816, the Remington Arms Company is still mostly known worldwide for its line of sporting and hunting firearms
According to the company, the Restructuring Support Agreement provides for the reduction of approximately $700 million of Remington's consolidated outstanding indebtedness and 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.
Remington's subsidiaries include brands such as Bushmaster, DPMS - Panther Arms, AAC, Marlin, Parker, Harrington & Richardson, Barnes, Nesika, Storm Lake, Dakota Arms, TAPCO, and Timbersmith. The Cerberus Capital Management L.P. group, current owner of the Remington Outdoor Company, will surrender its control to creditors afterwards.
AR-15 rifle makers such as Bushmaster and DPMS - Panther Arms are among Remington's operating subsidiaries
The reached Restructuring Support Agreement will allow Remington to continue to operate in the normal course
Remington's issues are deeply rooted in the course of management of the past decade or so. According to TTAG, the Cerberus Capital Management conglomerate has "burned through non-firearms-experienced CEOs", whose work went in detriment to manufacturing quality and quality control as a whole.
The recent push of the company towards product innovation and the establishment of new manufacturing facilities can be seen as a "too little, too late"; and after the Sandy Hook Elementary School shooting of December 2012, the Remington Outdoor Company had to face a specious, groundless and frivolous lawsuit backed by anti-gun groups as the owner of the manufacturer (Bushmaster) of the gun used by the spree killer.
Recently, Remington also launched a line of striker-fired, polymer frame semi-automatic pistols
Some analists blame the "Trump Slump" – a perceived decrease in firearm sales following the 2016 election of Republican runner Donald J. Trump as the 45th President of the United States – for the financial and difficulties faced by Remington and many other gunmakers.
But the "Trump Slump" is much diminutive as a phenomenon than some would like the general public to believe – as demonstrated by the record gun sales recorded during the 2017 Black Friday – and is largely due to the fact that both the politics pursued by the Obama Administration and the program of Democratic presidential candidate Hillary Clinton made law-abiding Americans fear that strict gun control measures could be put in place.
With pro-gun Donald Trump at the White House, the market returned to "normal" sales conditions, and its focus steered from modern sporting firearms to personal defense and concealed carry guns.
Innovation and export could be the key for Remington to leave crisis behind and come out on top again
It's GUNSweek.com's belief that the Remington Outdoor Company will have to face a thorough phase of innovation and make considerable investments in marketing and communication to regain appeal towards shooters as the tides of the market are changing.
Alternatively, or additionally, the company could focus on export. With its 500 million inhabitants approximately, the European Union area is living a phase when more and more citizens are expressing an interest in purchasing firearms for legal uses such as target shooting, hunting, and self-defense. But the generally strict gun laws currently in effect in the Member States of the European Union are frustrating that interest; if the Remington Outdoor Company, and the American firearms industry as a whole, wish to gain a secure hold on this growing market, they will need to start supporting gun rights movements in the Old Continent.