by 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.