Guitar-Maker Gibson Brands Files for Bankruptcy

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Gibson plans to continue manufacturing instruments. Throughout their century-plus of existence, countless musicians-from famous rock stars to local barroom heroes-have used Gibson guitars to create the soundtrack to our world. The company remains hopeful that they can re-emerge from bankruptcy intact, but with reported debts of between $100 million and $500 million on the books owed to numerous different creditors, it remains to be seen whether they will be able to pull it off.

A change in control will be undergone where current stockholders like CEO, Henry Juszkiewicz, will be replaced. According to court filings, current noteholders include Silver Point Capital, Melody Capital Partners and funds affiliated with KKR Credit Advisors. Some feel it's a result of a shift in the music zeitgeist away from guitar-driven music and toward more digitally-produced styles like EDM and hip-hop. Gibson will wind down its consumer-electronics business.

Among the more memorable in recent history are Angus Young of Australian rock band AC/DC, who plays a white Gibson SG guitar, echoed in the 2003 film School of Rock in which Jack Black also touts a Gibson SG. Gibson has begun the liquidation process for its debt-plagued, struggling global Gibson Innovations division, which sells headphones, speakers, accessories and other electronics. The move was meant to help the brand diversify and adapt to a changing market that had led to decreased sales.

"Gibson will emerge from Chapter 11 with working capital financing, materially less debt, and a leaner and stronger musical instruments-focused platform that will allow the Company and all of its employees, vendors, customers and other critical stakeholders to succeed".




"Over the past 12 months, we have made substantial strides through an operational restructuring". Court papers call for a one-year consulting deal and compensation package for Juszkiewicz.

The company issued an official statement this morning regarding its decision to enter bankruptcy protection.

The company also owns brands including Epiphone, Wurlitzer and Slingerland.

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