Remington Declares Bankruptcy…Again

Remington and its subsidiary companies declared bankruptcy for the second time in little more than two years. The Chapter 11 filing was made in US Bankruptcy Court for the Northern District of Alabama. There were separate filings for Remington Arms Company LLC, Remington Outdoor Company Inc., and Remington Arms Distribution Company LLC.

In reports prior to its actual filing for bankruptcy, it had been speculated that the Navajo Nation would be the buyer to take it out of Chapter 11. According to the investing site Seeking Alpha those talks broke down.

Remington had been searching for potential buyers and was in talks to sell itself out of bankruptcy to the Navajo Nation before negotiations collapsed in recent weeks, leaving the company without a lead bidder, or stalking horse.

I had speculated along with others that having the Navajo as the owners would put a crimp in the pending lawsuit in Connecticut over liability for the Newtown murders. This would have been due to the sovereign immunity of the Navajo Nation.

The bankruptcy filings indicate assets of between $100 million and $500 million with liabilities in the same range.

The five largest creditors are all governmental entities. They include (in order) the Pension Benefit Guaranty Corporation, the State of Arkansas, the City of Huntsville, the State of Alabama, and the State of Missouri.

This is followed by companies that make smokeless powder like St. Marks and Alliant, that provide forgings and barrels like Dasan USA, and those that supply basic materials (lead, copper, brass) like Doe Run and Eco-Bat Indiana. The only tax creditor listed was the Village of Ilion, NY which came in as the 38th largest creditor. This last bit leads me to speculate that Remington had been keeping up with its payroll, income, and excise tax payments.

Now that talks with the Navajo Nation have broken down and there is no lead bidder or stalking horse, it will be interesting to see how Remington comes out of this Chapter 11 bankruptcy. In its prior bankruptcy, I think it was a forgone conclusion that the hedge fund Cerberus would transfer ownership to investors Franklin Templeton and JP Morgan.

Here, we just don’t know. I would love to see the Navajo – or any tribe – emerge as the buyers if only so as to screw the Brady Campaign and the ambulance chasing lawyers in Connecticut. Time will tell and I’ll keep reporting on it.

How Appropriate

The McClatchy chain of newspapers is in bankruptcy. The chain includes such newspapers as the Sacremento Bee, the Miami Herald, and The State (Columbia, SC). Closer to me they own three of the ten largest newspapers in North Carolina including The Charlotte Observer and the News and Observer of Raleigh. While I can’t speak to the non-NC parts of McClatchy, their NC papers tend to be very anti-gun.

New Jersey-based Chatham Asset Management, a hedge fund, is their largest creditor and has won an auction to buy the chain. The auction results must be finalized by the bankruptcy court.

From the N&O:

“From the outset of this voluntary Chapter 11 filing, our aim was to permanently address both the company’s legacy debt and pension obligations and strengthen our balance sheet in order to provide greater certainty and stability to the wider group of our colleagues and stakeholders who benefit from a restructured McClatchy,” Craig Forman, president and CEO of McClatchy, said in a statement Sunday.

“We’re pleased that Chatham and the supportive secured first-lien creditors believe in our business and our mission and are helping to achieve these goals.”

When McClatchy, the nation’s second largest local news company, filed for Chapter 11 bankruptcy in February, its restructuring plan called for Chatham, which has been an investor since 2009, to emerge as owner. The company, whose stock had been publicly traded, would be under private ownership.

After the pandemic disrupted the economy in March, McClatchy added a second exit option, putting itself up for sale.

Chatham owns a couple of other newspaper & media companies: Canadian based Postmedia Network and American Media.

American Media was the parent company of the National Enquirer until April 2019 when it was forced to sell it by Chatham. It was erroneously reported by the News & Observer that they still owned it. Nonetheless, they retained such paragons of journalism as US Weekly, the Star, and inTouch.

As the conservative-leaning Carolina Partnership for Reform noted:

Just think… if you didn’t believe the news from these papers before, now you’ll have a reason to say why. And if you like scandal and sensation, you won’t have to go to the grocery store checkout aisle to get it.

When you consider it, the pairing of the News and Observer as a sister company to the American Media offerings is quite appropriate. While they are now piously progressive, as a student of North Carolina history, it is hard to forget their role in advancing white supremacy on behalf of the Democratic Party. Whether it was editorials attacking miscegenation or their scurrilous cartoons, the N&O (and the Charlotte Observer) was more sensational in its earlier days than even the tabloids are today.

As I said in the headline, how appropriate.

Remington Arms Eyeing Bankruptcy…Again

The Wall Street Journal reported Friday that Remington Arms is preparing to file for Chapter 11 bankruptcy again. If so, this will be the second time in about two years that they’ve sought the protection of the bankruptcy court.

As Michael Bane pointed out on Facebook, Remington had already shut down their AR brands and has missed out on the boom due to COVID-19. Moreover, pistols are selling like hotcakes – except for 1911s. Again, Remington missed out.

Now here is where the potential bankruptcy gets interesting. The probably lead bidder for Remington is the Navajo Nation.

From the WSJ:

The bankruptcy filing could come within days as the gun maker makes preparations for the Navajo Nation to serve as the lead bidder to purchase Remington’s assets out of chapter 11, these people said. Founded in 1816, Remington’s namesake weapons are mainstays in hunting, shooting sports, law enforcement and the military.

The Navajo Nation—a territory with roughly 175,000 people across parts of Utah, Arizona, New Mexico—could finalize a bid for Remington as soon as Friday, one of the people said. Any bid for the company would be subject to competing offers and require bankruptcy-court approval.

The timetable could be pushed back, and an offer from the Navajo Nation isn’t guaranteed to materialize, people familiar with the matter said.

The Navajo Nation, which explored buying Remington as far back as 2018, owns a set of business enterprises in industries including energy, transportation, and utilities. In 2019, a business owned by Navajo Nation purchased coal company Cloud Peak Energy’s mining assets out of bankruptcy.

What makes ownership by the Navajo Nation particularly interesting is that they have sovereign immunity. This is especially true in light of the litigation in Connecticut over Remington’s supposed liability for the Newtown murders.

Jim Shepherd of The Shooting Wire had some very astute comments on this issue today.

So what would a Navajo acquisition look like?

With their business acumen and consultants, it probably wouldn’t look very different from most other offers price-wise. But the Nation’s unique status would introduce two variables: sovereign immunity and tribal law.

Interpreting what sovereign immunity really means, especially in a business negotiation, is an assignment I’m not equipped to complete. It is a complicated relationship between the various tribes and the federal government. While their businesses generally operate under the U.S. tax codes including taxes, there are some very notable exceptions.

Tribes under the terms of sovereign immunity are shielded from litigation much the same as states. That protection “usually extends to suits arising from a tribe’s ‘off-reservation’ or commercial activities, including the activities of an off-reservation tribal casino.”

With regard to business endeavors, federal courts, according to the American Bar Association, generally do not distinguish between “governmental” and “commercial” activities. “Numerous courts,” says the ABA in Doing Business in Indian Country: A Primer “have thus held that tribal sovereign immunity extends to tribal casinos, businesses, schools and corporations (my emphasis).”

While it’s not absolute, there’s a “strong presumption” against any waiver of that immunity, and it can only be abrogated otherwise by an “unequivocal expression” of Congress.

Tribal officials and employees acting in their official capacities and within the scope of their employment are also shielded from damage suits and requests for injunctive relief. They’re also immune from subpoena enforcement to “compel production of tribal witnesses or documents.”

Think what having tribal sovereign immunity would do for a firearms manufacturer. They wouldn’t have to depend upon the Protection of Lawful Commerce in Arms Act which a President Biden and a Democrat-run Congress have promised to repeal. They could look both Brady Legal Project attorneys and ambulance chasing plaintiffs attorneys in the face and say “eff off.” Moreover, could you really imagine any Congress, Republican or Democrat majority, in these days and times trying to take immunity away from tribes?

2020 which was already an “interesting” year just got more interesting. I am anxious to see how this all plays out.

Remington Files Bankruptcy On Sunday

Remington Outdoor Company filed its long awaited bankruptcy petition with the US Bankruptcy Court for Delaware on Sunday. The agreement to do the pre-packaged Chapter 11 filing was reached with creditors in February. In the time following that agreement, Remington entered into a number of “material definitive agreements” with the various creditors.

According to Reuters, Cerberus will lose all their ownership rights in the bankruptcy. The equity in the company will now go to the creditors.

The creditors inked the debt-cutting deal prior to the Parkland shooting, and it is unclear if any have exited. The restructuring support agreement allows creditors to sell their holdings, but the buyer is bound by the deal.

One investor told IFR, a Thomson Reuters news provider, that his firm had contemplated buying the Remington loans that will be exchanged into equity, which were offered at as low as 25 cents on the dollar.

“We bowed out because we were uncomfortable,” he said.

After a Remington Bushmaster rifle was used in the Sandy Hook elementary school shooting in Connecticut in 2012 that killed 20 children and six adults, Cerberus tried unsuccessfully to sell Remington, then known as Freedom Group.

Katie-Mesner Hage, an attorney representing Sandy Hook families in a lawsuit against Remington, said in a prepared statement that she did not expect the gunmaker’s bankruptcy would affect their case.

The lawsuit referred to in the last paragraph is now before the Connecticut Supreme Court on appeal. The case was dismissed in state superior court as the judge decided that Bushmaster was protected by the Protection of Lawful Commerce in Arms Act as it was not a case of negligent entrustment which is an exception to the PLCAA.

Here is the bankrupt petition listing creditors and the CFO’s statement. Reuters notes that the court action is expected to go quickly and the restructured company could be out of bankruptcy by May.

Reuters: Remington Seeks Financing To File For Bankruptcy

Reuters reported yesterday that Remington Outdoor Company is in search of financing that would allow it to file for bankruptcy. They have reached out to a number of banks and credit investment funds.

The move comes as Remington reached a forbearance agreement with its creditors this week following a missed coupon payment on its debt, the sources said. The company has been working with investment bank Lazard Ltd (LAZ.N) on options to restructure its $950 million debt pile, Reuters reported last month.

Remington is seeking debtor-in-possession financing that will allow it to fund is operations once it files for bankruptcy, the sources said. The size of the financing and timing of Remington’s bankruptcy plans could not be learned.

Some potential financing sources, including credit funds and banks, have balked at coming to Remington’s aid because of the reputation risk associated with such a move, according to the sources.

In addition to sales being reportedly down 27% for the first three quarters of 2017, Remington faces a $550 million term loan that comes due in 2019 along with another $250 million in bonds that mature in 2020.

In other words, Remington is facing a perfect storm.

It’s Official – Colt Is In Bankruptcy

It have embedded below the Chapter 11 bankruptcy petition filed by Colt Defense LLC and its associated companies with the US Bankruptcy Court for Delaware. The associated companies include both Colt’s Manufacturing Company and Colt Canada. The petition was filed on Sunday evening according to their press spokesman.

I have not had time to read the whole document and I’m not an expert on reading bankruptcy petitions. However, I did read through the list of unsecured creditors to whom it owes money. Number two on the list was Magpul. Colt owes Magpul almost $1 million presumably for PMags, MOE furniture, etc. Many of the other unsecured creditors are small companies that provide services to the firearms industry. As such, Colt’s bankruptcy is going to be felt throughout the industry.

Jim Shepherd at The Outdoor Wire has some good commentary about the role of Sciens Capital Management in the Colt bankruptcy. They are the favored buyer or stalking horse bidder. Also read the commentary on the bankruptcy at Weaponsman.com.

More filings and the press release can be found here.

Report: Chapter 11 Filing Tomorrow For Colt

Matt Jarzemsky of the Wall Street Journal reports that Colt Defense LLC will go into bankruptcy tomorrow.

Gun maker Colt Defense LLC plans to file for chapter 11 bankruptcy-court protection by Monday, according to people familiar with the matter, amid business-execution issues and a heavy debt burden.

The company has secured financing from its existing senior lenders to continue operating while in bankruptcy and expects to remain in business after the restructuring, the people said.

According to the article, Sciens Management LLC owns 87% of Colt Defense. Moreover, some of the principals of that firm have ownership stakes in Colt’s West Hartford, CT plant. The lease on that plant comes up for renewal in October.

Colt will be relying on a bankruptcy court-ordered auction of business assets to help pay down its $355 million in debt. The primary assets that they own are their intellectual property (patents) and their trademark. It is my understanding that these have been heavily mortgaged already.

For a great historical perspective on the origins of Colt’s problems, see this post in the Weaponsman blog by “Hognose”.

I will be checking Pacer tomorrow to see what I can glean from the bankruptcy filing.

H.R.1181 — Protecting Gun Owners in Bankruptcy Act of 2011

Rep. Tim Griffin (R-Arkansas) along with Rep. Mark Critz (D-PA) have introduced a bill on March 17th that would protect up to $3,000 worth of a person’s firearms from being taken in a bankruptcy proceeding.

Griffin is a freshman Republican representing the Little Rock, Arkansas are in Congress. He had served as a JAG Officer in Iraq with the 101st Airborne Division and then as U.S. Attorney for the Eastern District of Arkansas. Griffin is A-rated by the NRA and was endorsed by them in 2010.

Critz, a Democrat, is from Johnstown and won the seat formerly held by the late Rep. Jack Murtha in a special election in May 2010. He went on to hold on to the seat in the 2010 general election. He had worked as the District Director for Murtha for many years. Critz is A-rated by the NRA and was endorsed by them in the 2010 general election. He is also a co-sponsor of HR 822 – National Right-to-Carry Reciprocity.

112th CONGRESS

1st Session

H. R. 1181

To amend title 11 of the United States Code to include firearms in the types of property allowable under the alternative provision for exempting property from the estate.

IN THE HOUSE OF REPRESENTATIVES

March 17, 2011

Mr. GRIFFIN of Arkansas (for himself and Mr. CRITZ) introduced the following bill; which was referred to the Committee on the Judiciary

A BILL

To amend title 11 of the United States Code to include firearms in the types of property allowable under the alternative provision for exempting property from the estate.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Protecting Gun Owners in Bankruptcy Act of 2011′.

SEC. 2. EXEMPTIONS.

Section 522 of title 11, the United States Code, is amended–

(1) in subsection (d) by adding at the end the following:

`(13) The debtor’s aggregate interest, not to exceed $3,000 in value, in a single rifle, shotgun, or pistol, or any combination thereof.’, and

(2) in subsection (f)(4)(A)–

(A) in clause (xiv) by striking `and’ at the end,

(B) in clause (xv) by striking the period at the end and inserting `; and’, and

(C) by adding at the end the following:

`(xvi) The debtor’s aggregate interest, not to exceed $3,000 in value, in a single rifle, shotgun, or pistol, or any combination thereof.’.

SEC. 3. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

(a) Effective Date- Except as provided in subsection (b), this Act and the amendments made by this Act shall take effect on the date of the enactment of this Act.

(b) Application of Amendments- The amendments made by this Act shall apply only with respect to cases commenced under title 11 of the United States Code on or after the date of the enactment of this Act.