REMINGTON OUTDOOR ARMS MANUFACTURER WENT BANKRUPT

Remington Outdoor Holding filed for bankruptcy in the Alabama state court last Monday. The restructuring process is not new for a North American company that has been making weapons for over two hundred years.

The previous time the company experienced it in 2018 against the background of a decrease in demand for weapons from ordinary Americans. This year, despite the positive market conditions (analysts record an increase in demand for weapons against the backdrop of massive protests and riots in the United States) , the company is bogged down in debt for almost $ 500 million.

The procedure carried out in accordance with Chapter 11 of the US Bankruptcy Code does not imply liquidation of the company. As a rule, such applications are filed in the court before the company is planned to be sold. Apparently, the current owner of the arms brand, Cerberus Capital Management, wanted to profitably realize its asset during a period of economic uncertainty caused by the pandemic and mass unrest in the United States.

The initiative to apply to the court is explained by the factors of trade imbalance.

Many arms dealers have begun to impose the trade restrictive mechanisms associated with the increased shootings. The management of Remington Outdoor and its subsidiary Remington Arms believes the reorganization proceedings will increase the brand's attractiveness to the large investors.

However, the experts believe that the problems with the company's work are primarily related to the management errors, but not to the external conditions. The financial liabilities accumulated over a couple of years are mainly the result of the unsettled old debts the company has received for legal services in the previous bankruptcy.   

In 2018, the company went through the reorganization proceedings in difficult conditions.

Then, in particular, it was possible to transfer the ownership to several creditors who agreed to write off the company's debts, which reached $ 775 million. Among them there were such investors as Franklin Templeton Investments and JPMorgan Asset Management.

The bankruptcy also contributed to the fact that Remington Outdoor received loans for $ 193 million from several banks of the US. However, it did not work out to sell the company profitably. The market environment influenced by the mass murder at Marjorie Stoneman Douglas High School did not encourage the sale of weapons.