Racist Gun Manufacturer Files For BK

 

The manufacturer of the gun that the Racist Nut used to shoot 26 at Sandy Hook Elementary filed Chapter 11 Bankruptcy on Sunday

 

by Dave Altimari Hartford Courant March 26, 2018 

The bankruptcy filing by Remington Outdoor Inc., the company that makes the rifle used in the 2012 Sandy Hook Elementary School massacre, will force some of the victims’ families to seek approval from a bankruptcy judge to let their legal fight against the nation’s oldest gunmaker go forward.

Remington’s weekend filing, which will turn the company over to its creditors to now operate, automatically “stays,” or stops, any legal action against the company until it emerges from bankruptcy, experts said Monday.

The bankruptcy comes as the families of nine victims who were killed and a teacher who survived the shooting wait for the state Supreme Court to decide whether to uphold a lower court judge’s decision to dismiss the lawsuit they brought against Remington or to overrule that decision and put the case back before a judge.

“We do not expect this filing to affect the families’ case in any material way,” said one of the families’ lawyers, Katie Mesner-Hage of Koskoff Koskoff & Beider, in a prepared statement.

But legal experts said beyond stopping litigation against the company, the filing raises the question about what unsecured creditors, such as the families, could be awarded should they eventually win a judgment against Remington. Experts did say they believed the bankruptcy filing won’t derail a decision by the state Supreme Court.

“The Sandy Hook families will need to file a motion asking the bankruptcy judge to lift the stay and to issue an order allowing the case to proceed in Connecticut,” said Matthew Beatman of Zeisler & Zeisler of Bridgeport. “What often happens with cases like this is both parties will agree to let the case go forward and let the Supreme Court decide the issue.”

Adam Lanza killed 26 people, including 20 first-graders, with a Bushmaster AR-15 after shooting his way through the front window of the school before killing himself. Lanza had killed his mother before going to the school.

The lawsuit was filed in January 2015 seeking to hold Remington liable, arguing it marketed the AR-15 to the public even though it knew it was designed for military use.

A Superior Court judge in Bridgeport dismissed the lawsuit in 2016, agreeing with attorneys for Remington that the lawsuit “falls squarely within the broad immunity” provided to gun manufacturers and dealers by the federal Protection of Lawful Commerce in Arms Act, or PLCAA.

The lawsuit also named Camfour Holding LLP, the gun’s distributor, and Riverview Gun Sales Inc., the East Windsor gun shop where Nancy Lanza purchased the AR-15 right around her son’s 18th birthday.

Under the plan filed in bankruptcy court in Delaware, Cerberus Capital Management LP, the private equity firm that controls Remington, will lose ownership and the creditors will take over the company.

Among its creditors are major financial institutions such as JPMorgan Asset Management and smaller companies such as Microbest Inc., a Waterbury-based company that makes parts for Remington’s guns.

The Sandy Hook victims are listed as an unsecured creditor, as are several others that have lawsuits pending against the company.

Beatman said, as an unsecured creditor, the Sandy Hook families will need to file a claim of proof in bankruptcy court as well as a statement estimating how much the lawsuit may be worth.

“Bankruptcy creates the ultimate concern of how much can you collect from a claim,” said Beatman. “You don’t often get a full payment.”

Georgetown Law Professor Heidi Feldman, who has been following the Sandy Hook lawsuit, said the timing of the bankruptcy filing was interesting. With both sides awaiting what could be a monumental state Supreme Court decision, Remington could use the bankruptcy filing to try and settle the case.

“This hits the pause button and perhaps Remington would reach out for a settlement rather than gamble on the Supreme Court ruling in their favor. What Remington could be hoping is, if they settle then no court ruling would be issued and they wouldn’t have to worry about an unfavorable ruling that could impact gun companies across the country or at the very least send the case back to the state court and allow discovery to begin, which they also don’t want,” Feldman said.

Remington’s attorneys have steadfastly argued that PLCAA protects them from the families’ lawsuit.

The bankruptcy filing comes about a month after the latest mass school shooting. The Parkland, Fla., shooting that killed 17 has spurred an intense campaign for gun control, including marches across the country this past weekend.

Some national companies, including Walmart and Dick’s Sporting Goods, have announced they will not sell semi-automatic weapons to anyone under the age of 21.

Remington, a North Carolina company with roots dating to 1816, has lined up $100 million with lenders to continue operations. It remains unclear what will happen to its 3,500 or so employees as it reorganizes.

Panic sales that drove revenue for gunmakers ever higher evaporated with President Donald Trump’s arrival in the White House. Late Sunday, according to records from the bankruptcy court of the district of Delaware, Remington agreed to a prepackaged deal that would give holders of the company’s $550 million term loan an 82.5 percent stake, according to a release. Third-lien note holders will take 17.5 percent of Remington and four-year warrants get a 15 percent stake.

Cerberus Capital Management, which acquired the company in 2007 as gun sales began to boom, tried to sell it less than a week after the Sandy Hook shooting. There were no takers.

In 2017, firearm background checks, a good barometer of sales, declined faster than in any year since 1998, when the FBI first began compiling that data.

But there were clear signs that gun sales, even as production increased, were already in decline. That is partially because a larger percentage of guns in the U.S. are owned by an increasingly small group of people.

According to a recent study by Harvard University and Northeastern University, the number of privately-owned guns in America grew by more than 70 million — to approximately 265 million — between 1994 and 2015. But half of those guns are owned by only 3 percent of the population.

That smaller base of what are sometimes referred to as “super-owners” has made the industry more unstable.

In 2015, Colt Holdings Co., another storied gunmaker, filed for Chapter 11 bankruptcy protection.

Profit growth at Sturm, Ruger & Co. is under severe pressure and the company’s shares are down 18 percent this year.

Some of Wall Street’s heaviest hitters are stepping into the national debate on guns as investment firms ask firearms makers what they are doing about gun violence.

BlackRock is a major shareholder in gunmakers Sturm Ruger, American Outdoor Brands, and Vista Outdoor Brands. About a week after the shooting in Parkland, BlackRock said it wanted to speak with the three firearms makers about their responses to the tragedy. It’s also looking into creating new investment funds for investors that exclude firearms makers and retailers.

Information from the Associated Press is included in this story.

 

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