Yesterday’s bankruptcy court hearing for Remington Outdoor Company was expected to be nothing much more than a formality. With seven purchasers for the 200 year old company’s remaining assets identified, there wasn’t much remaining for the telephonic hearing to do other than move the proceeding one step closer to bringing in the $151 million dollars that would then be applied to the company’s significantly larger debt.
With the buyers ready to move to the next phase of a bankruptcy purchase, U.S. Bankruptcy Judge Clifton R. Jessup, Jr. had made it very clear some several weeks ago that he wasn’t favorably disposed to holding off on the matter any longer.
That, however, didn’t deter one group. A last-minute Motion to Continue Sale Hearing was filed yesterday on behalf of VUONG Holdings, LLC. In that motion, VUONG had asked for a nineteen day delay in the proceedings while it prepared a qualified bid for the company that would be “anticipated” to be larger than the $151 million to be realized through the breakup bids for the company. VUONG, according to their filing, had also presented a plan that would continue the operations of the company.
Judge Jessup, based on “the arguments of counsel, and based upon the Court’s ruling as stated on the record,” denied that motion.
As the proceedings continue, you can expect more news as to the plans the seven purchasers have for their purchases.
In the meantime, a note from a former Remington senior executive and friend who “took exception” with a portion of yesterday’s feature on the bankruptcy and managerial missteps along the way to Remington’s demise.
While he readily acknowledge that senior managers bear responsibility for many of the decisions, he reminded me that those decisions are “frequently” driven by the “owners who ultimately hold and drive the purse strings.”
A well-made point. While it’s easy to blame the upper level management for Remington’s missteps, that glosses over the point that Remington’s owners haven’t exactly behaved as good stewards of the various brands.
In Remington’s bankruptcy number one, I was reminded, the seminal problem wasn’t that Remington wasn’t a relatively successful business, it was that the owner, Cerberus Capital, burdened the company with a terrific debt load, then used the money elsewhere. That’s true, and despite the fact that Cerberus’ Steve Feinberg and his team said they were ardent Second Amendment supporters, they took their dollars elsewhere, leaving Remington holding a very big bag.
In the latest bankruptcy, the ownership of the company, putting it mildly, were “reluctant” about their property. Franklin Templeton and JP Morgan were, at best, lukewarm about the industry. In fact, they showed no interest in the future and didn’t do much to maximize any potential.
So where is this going? Not far, and not for much longer. As was stated to me, when management and ownership don’t mesh, everyone has to make choices. Managers have to choose to do the best they can, for as long as they can, with whatever tools (funds) they have, or leave. Owners are faced with the choice to either give their asset the chance to succeed, or choose to strip the carcass and move on. That’s not meant to be overly harsh, but intentionally denying a company the opportunity to succeed is, ultimately, a choice. The alternative is to sell, close or declare bankruptcy.
Bankruptcy, in fact, is designed to give second chances. For the brands that were acquired during Remington’s gobble-up phase, this latest change in ownership may ultimately bring the opportunity they needed for them to succeed. Not every small company can thrive as part of an over-arching organization. Success has levels of magnitude.
As was pointed out to me yesterday, “sound ownership provides management the chance to be successful- our industry shows that time and again.”
Some companies prove that time and again. Ruger, Smith & Wesson, Beretta, Glock, SIG, Weatherby, Hornady and Mossberg are prime examples of passionate ownership and leadership working together. Yes, they’re about making money, but they’re also joint stewards of their brand.
Ultimately, their success proves something that many smart people from other industries can’t seem to grasp: ours is still very much a hands-on world.
It’s still an industry where deals can still be struck -and honored- based on a handshake. Although it’s still best to reduce those handshakes to writing.
We’ll keep you posted.
—Jim Shepherd
