Gunmaker Remington officially files for bankruptcy

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USA gun maker Remington Outdoor Company has filed for bankruptcy protection, after years of falling sales and lawsuits tied to the Sandy Hook Elementary School massacre.

In the court documents, Remington Outdoor Co.

After the Sandy Hook shooting, Cerberus announced it would sell the company, as its own agitated investors demanded an exit, but it failed to find a buyer. Sunday, the manufacturer filed for bankruptcy due to declining sales and legal troubles over its production of the Bushmaster AR-15 rifles, the one used in the Sandy Hook School shooting in Newtown, Connecticut and potentially defective triggers on its Model 700 bolt-action rifle.

Remington, based in North Carolina, has been making various handguns, rifles and shotguns since 1816. It remains unclear what will happen to its 3,500 or so employees as it reorganizes.

That type of gun has also come under increased scrutiny in recent years by gun control advocates because of its use in mass shootings.

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Panic sales that drove revenue for gunmakers ever higher evaporated with President Donald Trump's arrival in the White House. Pre-bankruptcy term loan lenders will get 82.5 percent of the new parent entity, while third lien lenders will get cash and warrants. It was bought in 2007 by Cerberus Capital Management for $118 million. Dick's CEO Ed Stack even penned an op-ed in the Washington Post that stated, in part, "It is clear we have a problem with the gun laws in this country".

According to a study by Harvard University and Northeastern University, the number of privately-owned guns in the nation grew by over 70 million from 1994 to 2015 to a total of about 265 million, with half of those guns owned by just 3 percent of the population. Hard industry conditions make today's agreement prudent. This year, the company projects some $395.9 million in sales and to double that figure by 2020.

Publicly traded competitors like American Outdoor Brands, Sturm Ruger and Vista Outdoor, have all reported massive declines in sales this year.

"I still think Remington's bankruptcy is not only reflective of the overall downturn in the firearms market over the past 16 months, but also the particular difficulty that producers of modern sporting rifles have been seeing during this same time", he added. 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.