NEW YORK (Reuters) - Weapons manufacturer Remington Outdoor Company Inc won approval for its bankruptcy plan on Wednesday, paving the way for the company to slash debt, boost its cash position and better weather the uncertain climate for firearms in the United States.
Remington filed for bankruptcy in March with a deal in hand to cut its debt by about $775 million, a little more than one month after a school shooting in Parkland, Florida.
The shooting sparked protests and a wave of retailers and corporations to limit sales and transactions relating to firearms. Mass discounter Walmart Inc (WMT.N), which Remington is reliant on for sales, said it would stop selling guns to people under 21 years old.
Remington will exit bankruptcy as soon as this month, with some of its creditors, including JPMorgan Chase & Co(JPM.N) and Franklin Advisors, taking ownership stakes in the company in exchange for forgiving debt. Cerberus Capital Management L.P., Remington’s current private equity owner, will give up its equity in the restructuring.
The company confirmed in a statement that its expects to emerge from bankruptcy before the end of May.
Remington will then have a new Asset Based Loan (ABL) facility of $193 million, the proceeds of which will refinance the existing ABL facility in full.
“I’m satisfied there’s sufficient creditor support to win confirmation,” Judge Brendan Shannon said in U.S. Bankruptcy Court for the District of Delaware. Remington filed a so-called pre-packaged bankruptcy, meaning it had largely won the support of its creditors before it filed in court.
Remington’s creditor committee, composed of a representative for its pension and plaintiffs in cases against the company for gun injuries and deaths, supported the bankruptcy plan, an attorney for the group told Shannon.
“I want to especially thank our dedicated employees spread across the United States that have remained focused on Remington throughout this process” said Chief Executive Anthony Acitelli.
The company’s bankruptcy plan allows for lawsuits against it to continue, including one filed by the families of the victims of the Sandy Hook, Connecticut, school shooting. One of its rifles was used in the 2012 shooting.
Gun sales fell after President Donald Trump was elected because firearm enthusiasts were no longer worried about increased regulation. That dynamic led in part to Remington’s bankruptcy filing.
Reporting by Jessica DiNapoli and Diptendu Lahiri; Editing by Dan Grebler