Earlier this year we reported that Gibson guitars were allegedly facing bankruptcy. According to Variety, today the guitar company has officially filed for Chapter 11 bankruptcy protection. As Bloomberg reported, their signed petition revealed the company owes at least $500 million. Lenders will be providing a new loan of up to $135 million to keep them afloat.
Gibson was founded back in 1902 by Orville Gibson and after over a century in business, the company has been allegedly struggling over the past several years under the leadership of Chief Executive Officer Henry Juszkiewicz.
Variety revealed the announcement stated:
“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.”
The company will face a huge change in command including replacing stockholders such as Juszkiewicz, who owns 36% of the company. The announcement explained the change of control will be “to facilitate a smooth transition during this change of control transaction and to support the Company in realizing future value from its core business.”
“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. 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.”
Here’s hoping that the iconic brand will stay afloat, even if it hasn’t been as iconic recently.