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Bankruptcy Law Blog

Tuesday, May 29, 2018

Bankruptcy Is Remington’s Road to Redemption

Remington, the nation’s oldest gun manufacturer, employs about 500 people at its factory in Huntsville, and thanks to our nation’s bankruptcy system, it will continue to do so for the foreseeable future. Remington is the latest in a long line of companies that have been able to use the bankruptcy process to turn their fortunes around and chart a path forward. The business community’s embrace of bankruptcy as a path to redemption and a way to retool is something that consumers should copy.

Far too frequently, filing for bankruptcy is seen as a mark of failure. Clients who come into our office are often embarrassed at the predicament they are in. People see the process as an admission of defeat. Nothing could be further from the truth.

Bankruptcy exists because we as a society have told our government that we want them to provide a way for people and businesses to start over. We do this because we know that the next great innovation will not exist if people are not willing to take risks. We do this because we don’t think it is fair that the treatment for a costly illness should leave someone destitute. We do this because debtors prisons went out of style in the 1700s!

Bankruptcy is much more about finding a path forward than it is about admitting defeat. Remington is a great example of this. It filed for Chapter 11 bankruptcy, which allowed it to shed a bunch of debt that was weighing the company down. It has emerged more flexible and refocused on its core brand, which is a good thing since the market for guns is reportedly slowing. While it was going through the bankruptcy process, the factory in Huntsville stayed open, operating like it was business as usual.

Individuals and families have the opportunity to do the same sort of financial retooling by filing under Chapter 7 or Chapter 13 of the bankruptcy code.

Under Chapter 7, most assets are sold off, with the proceeds going toward paying off creditors. Most remaining debt is then forgiven. We say most because certain debt, like back taxes, unpaid child and spousal support, and student loan debt is rarely forgiven. Other debts, like credit card debt or medical debt, is wiped away. The whole process takes just a few months.

Chapter 13 is a more lengthy process. Where Chapter 7 is like a going out of business sale, Chapter 13 is more akin to the restructuring that Remington did under Chapter 11. Under Chapter 13, an individual or family keep their debt and whatever assets they want to hold on to. The bankruptcy court sets up and oversees a repayment plan that allows the filer to get back on the right financial track by simplifying the repayment process and facilitating the negotiation of certain debts. At the end of the years-long repayment plan process, a lot of the filer’s debt should be paid off. Some of the remaining debt is forgiven, and what is left over is manageable.

It is time for people to take a page out of the book businesses are reading, and learn that bankruptcy is a tool. It is a way forward to a better future, not an admission of failure.


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”