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.