Remington Outdoor Co. plans on filing for bankruptcy. One of the largest makers of firearms in the United States, the company’s move is intended to lessen its debt and revive its business.
“Since its founding over 200 years ago, Remington has been a uniquely American company and brand,” Executive Chairman of Remington, Jim Geisler, said in a statement. “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 company’s reorganization will remove $700 million in debt, reports Fortune. One of the reasons sales of Remington products have dropped is due to diminished fears among gun owners that the government will establish additional regulations on the purchase of firearms. After President Trump took office in January 2017, he called himself a “true friend” of the gun industry. Ironically, his support of the second amendment is hurting businesses like Remington. In the first three quarters of 2017, sales dropped 27.5 percent to $466.7 million, putting the company in the red.
Remington also struggled to regain its footing following the 2012 tragedy at Sandy Hook elementary school in Newtown, Conn., in which 20 children and six adults were killed by a man in possession of several firearms, including a Remington Bushmaster assault rifle. This event prevented the company from appealing to new investors. Private equity firm Cerberus Capital, which controls Remington, was pressured to sell the business but was unable to do so.
While Remington navigates the Chapter 11 process, it will receive $145 million in bankruptcy “debtor-in-possession” financing, reports Fortune. Cerberus will cease to be its owner, and creditors will receive equity in exchange for the lowering of debt.
While these actions may save the business in the short term, it may be some time before sales increase. Background checks for prospective firearms buyers have been dropping steadily, according to FBI statistics. In all of 2017, background checks fell 8.4 percent to 25.3 million. This information is an indicator of how many firearms are sold.