Update: Remington Bankruptcy

It seems like yesterday when Guns & Ammo celebrated the 200th Anniversary of Remington Arms Company in the December 2016 issue. The year 2020 also denotes the 150th anniversary of Marlin Firearms, one of several Remington subsidiaries. Brands with such a long and storied history having made indelible marks on the firearm culture are facing troubling times once again. According to various sources, Remington is preparing to file bankruptcy for the second time in two years. Talks are underway to transfer ownership of the company to the Navajo Nation, and the news is spreading to attract the attention on both sides of the gun debate.

Ten years ago, Remington was a colossus flush with private-equity cash. When Cerberus Capital bought Remington and created the Freedom Group, the company was earning $500 million a year in revenue. The Freedom Group bought many companies such as the aforementioned Marlin as well as Barnes Bullets, Advanced Armament Corporation (AAC), Harrington & Richardson, DPMS, New England Firearms (NEF), Dakota Arms, LC Smith, Parker and clothing companies EOTAC and Mountain Khakis. In 2013, the company earned $1.3 billion. In 2014, Remington announced that it was taking over a massive industrial facility, formerly a Chrysler manufacturing factory, in Huntsville, Alabama, with the idea of consolidating various locations under a single roof. From the outside, Remington looked unstoppable. President Barack Obama’s entire eight-year-term drove firearm sales to all-time-highs as money pour in.  

In March 2018, an entirely different picture emerged: Remington Outdoor Company filed for Chapter 11 bankruptcy. Deep in debt and faced with mounting lawsuits over the marketing of the Bushmaster rifles like one used in the 2012 Sandy Hook school shootings, Remington found itself struggling to survive. Many intuitional investors sought to divest from the company, and Remington borrowed heavily to buy them out. 

Optimism existed, though, as Remington emerged from bankruptcy less than a month later. At the same time, Remington reportedly turned down a $500 million offer from the Navajo Nation to buy the firm, though the “Navajo Times” reported that no such offer was ever formally made. Remington’s apparent success was short-lived. In March 2019, it was announced that Remington would lose $3 million in financial incentives from the state of Alabama for failing to comply with the terms of the deal that brought the company to Huntsville. With sales slumping, Remington couldn’t afford to employ enough Alabamians to meet their agreement with the state.     

Then, Remington faced a double strike of financial problems. Firearm sales slumped in the wake President Donald Trump’s election, and ongoing litigation that appellate courts were allowed to continue despite The Protection of Lawful Commerce of Arms Act of 2005, which was designed to shield gunmakers from such suits. “True,” the courts said, “Remington couldn’t be sued for manufacturing the rifle, but they could be sued for marketing it under state law.” Hence, litigation costs persisted, and Remington’s sales dropped by 27.5 percent in the months after Trump took office.

The firearms and ammunition markets have been enjoying a revival since the COVID-19 outbreak shut down America in March 2019, but the increase in business wasn’t enough to keep Remington afloat. On June 26, 2020, news was released that Remington planned to file for bankruptcy again. This news wasn’t a shock to insiders of the firearm industry, but the second part of the story was a surprise: the primary bidder to buy the company in bankruptcy would be the same Navajo Nation that offered to buy the Remington, previously. This time, it appears that the Navajo Nation will get its wish.  

With a population of more than 175,000 members, the sprawling Navajo Nation occupies land in three contiguous states. The Nation is reportedly proposing the purchase of an unnamed company for $300 million, which various news outlets have taken as confirmation of the proposed deal. Remington offered no comment to Guns & Ammo questions on these matters, which is a common response during a bankruptcy situation. The fact that Remington didn’t deny the reports is notable, however.             

So, what does this mean for America’s oldest gunmaker? To start, the bankruptcy should protect Remington from the ongoing lawsuits that have weighed so heavily on its finances. The sovereign immunity of the tribe might prove to be an additional legal protection going-forward. The Navajo Nation is a well-funded buyer with 2017 trust-fund assets worth a reported $3.28 billion. Presumably, the Nation could inject much-needed cash into the brand.

There’s more to the story, though. After the previous purchase attempt, the “New York Times” reported that the Navajo Nation had planned to discontinue civilian sales of AR-15s and similar firearms “to focus on police and defense contracts.” That is their prerogative, and there is a long list of companies willing to meet that market need. When was the last time you saw a new Bushmaster or DPMS rifle for sale, anyway? Those brands have already been effectively eliminated from the company’s portfolio. 

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Several major questions remain. Will the deal go through as reported? If so, will the Navajo Nation attempt to move operations to the reservation where the unemployment rate is more than 19 percent? Rumor has it that official word of the bankruptcy will come within days.