Gibson Brands Inc., a guitar company, has filed for bankruptcy, Bloomberg reports.
Despite the Chapter 11 filing, the brand maintained in a statement that its turnaround plan can “assure the company’s long-term stability and financial health.”
Videos by PopCulture.com
The brand says that the re-structuring agreement will be re-focusing on the making of musical instruments and professional audio products. It will also be focusing on its core business, the iconic brands Gibson and Epiphone.
“Over the past 12 months, we have made substantial strides through an operational restructuring. We have sold non-core brands, increased earnings, and reduced working capital demands,” a statement from Chief Executive Officer Henry Juszkiewicz reads. “The decision to re-focus 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. Importantly, this process will be virtually invisible to customers, all of whom can continue to rely on Gibson to provide unparalleled products and customer service.”
According to Bloomberg, the company’s turnaround plan gives some of the company’s lenders equity of ownership of the business. Support from senior noteholders will help Gibson repay bank loans while going through a “change of control” transaction, according to papers filed Tuesday in Delaware.
The petition shows the company owes as much as $500 million and that lenders will provide a new loan of up to $135 million to keep Gibson afloat.
The decision follows years of financial challenges facing the company, with it owing much of that to its ill-fated “consumer electronics” division Gibson Innovations, which will be liquidated.
Gibson was founded in 1903 in Kalamazoo, Michigan. It recently moved out of its Nashville officers, where it had operated since the mid-1980s. Several of its guitar models, including the Les Paul, SG, ES-335 and others are famous in rock and roll culture, with artists like Elvis Presley, B.B. King and Pete Townshend favoring the instruments.
“The Gibson name is synonymous with quality and today’s actions will allow future generations to experience the unrivaled sound, design and craftsmanship that our employees put into each Gibson product,” Juszkiewicz said in the statement.
