Navajo Backed Out as Remington Files for Bankruptcy with No Potential Buyer in Sight
Remington filed for Chapter 11 bankruptcy during a time when demand for firearms and components was among the highest in history. Furthermore, the firearm manufacturer did so without a potential buyer on sight after Navajo Nation backed out of a possible deal to acquire the company. The Wall Street Journal reported that the business could be split into firearm manufacturing business and ammunition sales and sold off separately.
Remington's bankruptcy was because the company failed to reduce its operational costs in addition to expensive lawsuits stemming from the use of one of its rifles, the Bushmaster Bushmaster XM15-E2S, in the Sandy Hook Elementary shooting. The victims' family claim Remington was responsible for the deaths of the students and staff members because it manufactured and marketed the rifle. Twenty-six people lost their lives in the incident.
The plaintiffs claim Remington violated the Connecticut Unfair Trade Practices Act by marketing the rifle to civilians. Currently, the court has granted the victims access to the perpetrator's computer to determine whether he was exposed to the advertisements.
The Navajo Nation backed out of the deal to buy Remington, claiming a lack of transparency from the original owners. Remington remained with just a few weeks to find another preferred buyer but failed to do so in the current climate.
The anti-gun attitude among financial institutions affected Remington's ability to find a preferred buyer. The company has also failed to take advantage of the increased demand in firearm-related goods because of manufacturing hardships occasioned by COVID-19 and the George Floyd protests taking place.
The company initially transferred ownership to its creditors to settle a $775 million debt in 2018 when it first declared bankruptcy. Franklin Resources Inc. ended up owning the majority of the shares alongside JPMorgan Chase & Co., which has substantial control over the company.
The 204-year old gun maker declared to own assets and liabilities of between $100 million and $500 million and up to 5000 creditors. With the current state of the business, the fate of the suppliers remains in limbo.
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