The venerable arms manufacturer is not going out of business, and the company will continue to produce guns after it’s gone through the bankruptcy process. The confusion over what Remington’s bankruptcy actually means highlights just how tangled the laws surrounding insolvency can be, as well as the importance of accuracy in conversations about business practices.
In February, Remington started making moves to file for bankruptcy protection, citing what some are calling the “Trump slump” in gun sales; numbers are dropping under the Trump Administration, reflecting larger gun buying trends. Progressive, liberal administrations tend to be good for gun sales, but under conservatives, people are less worried about the possibility of losing access to weapons via tighter gun control.
When many of us hear “bankruptcy,” we think of liquidating assets and closing up shop. But in Remington’s case, the filing is actually a chapter eleven, also known as “reorganization.”
If this sounds pedantic and boring to you, you’re not alone — but it’s an important distinction. This move allows the company to restructure itself and get rid of some distressed assets to stay viable in the long term — possibly by making itself appealing to a potential buyer.
Remington is also seeking to secure funding to keep itself afloat. Some of the banks financing the company will sound familiar: Wells Fargo, Bank of America, Deutsch Bank and Chase are all willing to take a chance on investing in the arms trade. Without this financial support, the company would have been forced to close. Those funds also facilitate a swift emergence from chapter eleven, helping Remington keep on making guns while it restructures itself.
But Remington faces another problem: a prolonged class action lawsuit surrounding the Sandy Hook killings in 2012, with parents attempting to sue the manufacturer in federal court. By declaring bankruptcy, the company may be able to neatly exclude itself from liability in this case, starting with a clean slate. In a separate legal case, Remington would also be able to dodge responsibility for a settlement regarding a manufacturing defect on one of its rifles.
You may have heard that gun manufacturers enjoy “absolute immunity” from legal consequences for their products. That’s not quite accurate, but it is true that the Protection of Lawful Commerce in Arms Act extends special treatment that makes it more challenging to bring suit against gunmakers. Sandy Hook parents have already been rebuffed in courts because of this in the past. Some critics wonder if this bankruptcy filing is actually just a way to avoid liability in court.
When you hear that a company — especially one in a notorious industry — is filing for bankruptcy, take notice of the kind of filing involved and how the company intends to reorganize itself. A company may plan on starting up again, selling itself to another company or liquidating.
If you’re troubled by the gun industry’s unique legal protections and by the larger trade in arms, you may wish to consider hitting gun manufacturers where it hurts: In addition to not buying guns, you can put pressure on banks to stop investing in the industry, cutting off the supply of money these companies need to thrive.
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