Published May 01, 2018While Gibson spoke of refinancing and monetizing assets upon reports of facing bankruptcy earlier this year, the guitar manufacturer has now officially filed for Chapter 11 bankruptcy protection.
Bloomberg reports that Gibson Brands Inc. is set to go through a "change of control" transaction that will see ownership of the company transferred from current stockholders, including CEO Henry Juszkiewicz, to its lenders (which include investment firms such as Silver Point Capital, Melody Capital Partners and more).
The company owes much of its financial instability to its Gibson Innovations business, a "consumer electronics" division acquired in June 2014 as part of a plan to relaunch Gibson Guitars as a "music lifestyle" company. Bloomberg notes that a news release from the company reveals plans to liquidate the division entirely.
"Over the past 12 months, we have made substantial strides through an operational restructuring," CEO Juszkiewicz told Variety. "We have sold non-core brands, increased earnings, and reduced working capital demands. The decision to refocus on our core business, musical Instruments, combined with the significant support from our noteholders, we believe will assure the company's long-term stability and financial health."
Juszkiewicz added that the restructuring process will be "virtually invisible" to customers, who "can continue to rely on Gibson to provide unparalleled products and customer service."
Variety notes that Gibson has filed motions that, pending court approval, will allow the company to operate its business as usual throughout the restructuring process.
Gibson was founded in Kalamazoo, MI, in 1902. The company's guitars are synonymous with rock music, with models such as the Les Paul, the SG, Firebird and more used by genre icons such as Eric Clapton, Jimmy Page, B.B. King, Slash and many more.