For the second time in two years, Remington Outdoor Co. is on the verge of collapse. The American gunmaker has filed for bankruptcy with the intention of looking for a buyer for the 200-year-old company.
Remington disclosed that falling revenues from the sale of firearms kept the group from earning any income even after it reformed its finances in its first bankruptcy filing. According to court documents filed in Decatur, Alabama, Remington registered $437.5 million in revenue in 2019, about 50 percent of the business it did three years earlier.
Remington's bankruptcy protection filing came as the gun manufacturer was hounded by financial setbacks partly as a result of some retailers imposing restrictions on firearm sales following a spate of shootings in the U.S. The company listed its assets and liabilities in the range of $100 million to $500 million from 1,000 to 5,000 creditors, in the filing.
Remington, which supplies firearms for shooting sports, hunting, law enforcement, and the armed forces, will attempt to sell its existing business to avoid a total shutdown. Remington handed ownership to investors including Franklin Resources Inc. and JPMorgan Chase & Co after its second restructuring in 2018.
The 204-year-old American weapons manufacturer, one of the most popular brands in the firearms business, sought government intervention on Monday at a time when mounting jitters associated with the ongoing pandemic, a crumbling economy, and national protests following George Floyd's murder have led to record-high U.S. gun sales.
The Federal Bureau of Investigation revealed last month that it launched nearly 4 million firearm background checks, a proxy for firearm sales. That surpassed the previous record set in March of 3.7 million criminal checks to determine if a pistol could be legally acquired.
Remington owes multiple creditors over $250 million, including a $12.5 million debt to the company's hometown of Huntsville, Alabama, which raised a loan to help upgrade a manufacturing facility in the area. The Chapter 11 filing will enable the gunmaker to keep functioning while it crafts new strategies for a turnaround and to settle its debts.
Remington has been seeking potential buyers and was in discussions to sell the company out of bankruptcy to the Navajo Nation prior to the breakdown in negotiations in the past few weeks, rendering the group void of a lead bidder in place. A source with knowledge of the matter disclosed that Remington's weapons and ammunition businesses could be sold off separately.
Law firm O'Melveny & Myers is handling Remington's Chapter 11 bankruptcy, while Akin Gump Strauss Hauer & Feld is representing the company's independent members of the board overseeing the sale proceedings.
