According to records from the Bankruptcy Court of the District of Delaware, Remington Outdoor Co. agreed to a prepackaged deal that would give holders of the firm's $550 million loan an 82.5 percent stake.
The filing will allow the 200-year old company to reduce its debt by $700 million and contribute $145 million to its subsidiaries.
With the Chapter 11 filing, Remington is expected to hand the keys over to creditors, including Franklin Resources and JPMorgan Chase.
Remington's reputation took a hit in 2012 after it was confirmed that Adam Lanza used one of the company's Bushmaster XM15-E2S guns in the CT massacre in which he killed his mother and 26 children and educators at Sandy Hook Elementary School.
Once the bankruptcy process is complete, Cerberus Capital Management, a private equity group, will sell off the gun maker's assets.
Remington, which employs 3,500 people, is among the largest makers of guns and ammunition in the country.
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In court papers filed with the U.S. Bankruptcy Court in Wilmington and obtained by SGB Media, the company plans to exit bankruptcy proceedings as soon as May 3. There will be no job losses at the Ilion, NY plant and at this time Remington has no plans to relocate the facility.
Katie Mesner-Hage, an attorney representing Sandy Hook families in a lawsuit against Remington, said in a prepared statement that she did not expect the gunmaker's bankruptcy to affect their case.
The same type of gun was used to kill 17 in a Parkland, Florida, high school, a massacre that lead to drew hundreds of thousands of anti-gun violence protesters to the capital and to the streets in cities across the nation this past weekend.
Madison, North Carolina-based Remington told investors on March 23 that it had negative operating cash flow of $7.4 million. Remington, which owns more than a dozen brands, followed through with plans announced last month to restructure the company's almost $1 billion debt load. NPR reports gun manufacturers, believing Hillary Clinton would be elected, ramped up production, which turned out to be a bad decision.
Remington experienced a "significant decline in sales" over the previous year when demand "ultimately did not materialise" after the company boosted output in 2016, Jackson said.
Publicly traded competitors like American Outdoor Brands, Sturm Ruger and Vista Outdoor, have all reported massive declines in sales this year. The incident sparked a protest that has influenced banks and investors as well as other entities in corporate America to review their ties to the gun industry.