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Tuesday, March 27, 2018

Remington files Chap 11 bankruptcy !


In good old days, in Tamil movies, a rich man would suffer a great set back (mostly with the ship carrying his stock sinking !) and in a financial crisis, he would file ‘yelllow notice’ – immediately people would start treating him badly .. .. ‘yellow notice’ was bankruptcy.  Nandakumar, directed by Keshav Rao Dhaibar, produced by A. V. Meiyappan hit the screens in 1938 !

A few decades ago Tripicane streets were dotted with Srinivas, Padmavathi, Sarathi, Shivish Halda, Ganesh, Halashyam ………… and more.  Be it Mylapore, T Nagar, Purasawakkam or Mayavaram – situation was no different. One could see young boys and girls walking with sheet paper rolled  .. ..the learning courses were usually of an hour duration… the last 10 minutes, if you are to enter the hall, you might be frightened with the silence that precedes typical sound – keyboards pressed, cylinders moving, carriages returned,  occasional paper change… people with total concentration seeing printed matter placed on their side and deftly moving their fingers.  This is no post on the romance that developed in those places – but how  Godrej, Halda, Facit & Remington (brands of typewriters)  were the names that we saw, fingered and dreamt. 

Chapter 11 is a chapter of Title 11 of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation, partnership or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Though I have known Remington to be a typewriter, founded in 1816, Remington is "one of America's oldest and largest manufacturers of firearms," according to court filings. Remington is also one of the best-known gun makers in the world. It's owned by Cerberus Capital Management, which plans to shed ownership once the bankruptcy is complete. The firm, founded more than 200 years ago, filed for bankruptcy protection to cut a deal with its creditors. Remington's chief financial officer said the company's sales dropped significantly in the year before its bankruptcy, court papers show. The filing comes amid fresh demands for greater gun control in the US.  ; we think that in US, there is greater demand for fire arms (read guns).  Analysts say more Americans were buying guns two years ago because they feared a possible Hillary Clinton presidency could usher in gun control policies,  and that baffles the little knowledge of Economics that we have – when demand exceeds supply, the prices go up and the manufacturers / traders should do well, but .. …. ..

A shooting at a Florida high school in February has revived the debate on gun control, and on Saturday hundreds of thousands of protesters took to the streets of US cities. Some US retailers have raised the age limit for certain firearms purchases to 21 or stopped stocking semi-automatic weapons. It's tempting to read Remington's bankruptcy, occurring in the midst of anti-gun protests and after the bankruptcy of rival Colt in 2015, as a sign that America's gun culture might not be as impregnable as it seemed. However,  Remington has had plenty of problems of its own making, including errors in financial statements and faulty products. It is reliant on chains like Walmart and Dick's Sporting Goods, which are fighting for customers in every category as shopping habits shift online. Then there is the company's frequent losses and more than $1bn (£700m) in debt, piled on under owner Cerberus Capital Management during a decade of acquisitions.

Remington's sales did fall markedly last year, tumbling to $603m - about half what the firm netted in 2013. But most analysts think that's because buyers are less worried about the possibility of new gun restrictions since US President Donald Trump took office. The restructuring plan the firm announced is set to wipe out much of the company's debt burden - and meanwhile the firm, under new owners, is to continue operating. Remington's Chapter 11 filing is unlikely to be the end of the story.

In the mythological movie Nandakumar released in 1938 TR Mahalingam and TR Ramachandran made their cine debuts.  TRM was just 13 at that time and the actor singer went on to reach greater heights, acted, produced films and eventually ended on a sad note, losing all his wealth.

With regards – S. Sampathkumar
27th Mar 2018.

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