Remington Files for Chapter 11 Bankruptcy Protection; Sandy Hook Case Temporarily on Hold
As the Connecticut Supreme Court weighs the Sandy Hook families' case against the gun maker, Remington Outdoor Inc. filed for Chapter 11 bankruptcy protection in a move that could delay the litigation.
March 27, 2018 at 12:25 PM
4 minute read
Remington Outdoor Co. Inc.'s Chapter 11 bankruptcy filing Sunday could mean a Delaware court might decide when Sandy Hook families can try and hold the gun maker liable for the 2012 mass school shooting.
The filing for bankruptcy protection put all other proceedings against Remington on hold. This means the Connecticut Supreme Court's pending decision on whether to remand the case to Bridgeport Superior Court for discovery is stalled, unless the Delaware bankruptcy court allows it to move forward. The families would have to ask the bankruptcy court for relief to pursue their claims against Remington, the nation's oldest gun maker.
“There is now an automatic stay. Part of the bankruptcy code bars any litigant from continuing a prebankruptcy cause of action,” said Daniel Cohn, a partner with the Boston office of Murtha Cullina. “The bankruptcy court has the power to lift the automatic stay.”
If the families do file a motion to lift the stay, and U.S. Bankruptcy Judge Brendan Linehan Shannon denies their request, they'd have to wait until the end of the bankruptcy case to continue their litigation, bankruptcy attorney Marc Miller said.
“There are Chapter 11 cases that are 10 years old,” Miller said.
Miller, of counsel for the Bridgeport offices of Cohen & Wolf, said it's common for defendants to file for Chapter 11 bankruptcy protection to stall or halt a lawsuit. Miller and Cohn both declined to venture a guess as to Remington's strategy in filing for bankruptcy as the families' case reached the Supreme Court stage, and whether the company meant to stall the Sandy Hook litigation.
“We often see Chapter 11 filings like this as a way to, essentially, keep the litigation from proceeding. It is a tactic that is done often,” Miller said.
Cohn noted Chapter 11 would provide some breathing room for the debtor to reorganize.
And Miller pointed out that a Chapter 11 filing didn't mean Remington was liquidating. “It's still going to continue its operation and, from their standpoint, still make profits,” he said.
Bankruptcy expert Thomas Gugliotti agreed.
“The bankruptcy filings will slow things down, but it will not make them go away,” said Gugliotti, chairman of the creditors' rights practice at Hartford-based Updike Kelly & Spellacy.
Remington's Chief Financial Officer Stephen Jackson said the company has seen a significant decline in revenue and sales over the last 12 months, according to a report in USA Today. “The overall business and industry environments continue to cause significant financial hardship,” the news outlet quoted Jackson as saying.
The litigation reached the Connecticut Supreme Court after the families appealed a 2016 dismissal by Fairfield District Superior Court Judge Barbara Bellis.
Bellis found the Protection of Lawful Commerce in Arms Act and the negligent entrustment principle broadly prohibited gun makers, distributors, dealers and importers from lawsuits for harm caused by the criminal misuse of their firearms.
The families' attorney, Katie Mesner-Hage of Koskoff Koskoff & Bieder, seemed undeterred.
“We do not expect this filing to affect the families' case in any material way,” she said in a statement Monday.
Remington's lead attorney, Chicago-based Swanson, Martin & Bell partner James Vogts, declined to comment. Its local counsel, Scott Harrington of Diserio Martin O'Connor & Castiglioni in Stamford, also declined to comment Tuesday.
The Chapter 11 bankruptcy protection filing came on the same weekend that more than 1 million people worldwide protested gun violence.
Last week, the joint judiciary committees of the Connecticut Legislature held a public hearing on a bill similar to Gov. Dannel Malloy's proposal to ban bump stocks on weapons.
“Bump stocks allow guns to fire at machine gun-like speeds and have no place in our state,” Malloy said in a statement at that time. “There is no excuse for inaction on this no-brainer legislation.”
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