Remington Outdoor Company on Sunday filed for Chapter 11 bankruptcy in Wilmington.
In February, Remington had earlier reached a restructuring agreement with creditors that will reduce debt by $700 million and contribute $145 million in new capital.
However, the gunmaker presumably delayed the Chapter 11 filing as it worked to line up backing from other creditors.
Creditors will end up with a stake in the company A pre-packaged plan of reorganization is expected to be filed with United States Bankruptcy Court in Delaware.
Remington has been struggling with a decline in the sales of firearms, following the election of Donald Trump as president.
A wave of mass shootings has also put firearms companies on the defensive.
The election eased fears regarding gun control efforts. Lawsuits related to the Sandy Hook school shootings were also cited as a factor in the Remington filing.
Last month, Executive Chairman of Remington, Jim Geisler, stated, “Since its founding over 200 years ago, Remington has been a uniquely American company and brand. Our longevity is owed to generations of loyal customers and hard-working employees who met challenges and delivered results. Difficult industry conditions make today’s agreement prudent. I am confident this regrouping ensures that Remington will continue as both a strong company and an indelible part of our national heritage.”
The agreement can be terminated upon the occurrence of certain events. Chapter 11 filings are also subject to objections from other creditors.
Remington Outdoor Company, headquartered in Madison, N.C., is a maker of firearms, ammunition, and related products for the hunting, shooting sports, law enforcement, and military markets.
Brands include Remington, Bushmaster, DPMS/Panther Arms, Marlin, H&R and Dakota Arms.
Remington, a two-century-old gunmaker, has seen a succession of owners. The company was owned by DuPont for nearly six decades before it was sold to a private equity company in the 1990s.
DuPont’s research led to Remington’s Nylon 66, a Remington rifle that used a DuPont material, rather than a wood stock.
Current owner is Cerberus Capital Management, a private equity firm that owned Chrysler for a short time before the company went into restructuring proceedings and became part of the federal bailout of the auto industry. Chrysler later became part of Italian automaker Fiat.
Cerberus loaded up the company with debt as gun companies were snapped up in an effort to building market share
Private equity firms often use debt, rather than stock, to finance expansion or the make the acquisition itself.
Oftimes, the goal is to later form a publicly traded company, sell stock and cash out. In other cases, the debt burden and sliding revenues prevent a stock sale and lead to a pre-packaged Chapter 11.
For more information on Remington, log on to www.remingtonoutdoorcompany.com.