Nashville-based Gibson Brands – the corporation behind Baldwin Piano, Wurlitzer, Gibson Pro Audio, and (most significantly) Gibson Guitars – filed for Chapter 11 bankruptcy protection on Tuesday, May 1.
The petition notes that Gibson currently has up to $500 million in debt and that, going forward, operations will be focused on the MI side of the business, “unburdened by the challenges experienced by… separate, primarily non-U.S. consumer electronic business.”
A statement released by Gibson Brands, Inc. on May 1, notes that, “The Company has reached a ‘Restructuring Support Agreement’ with holders of more than 69.0% in principal amount of its 8.875% Senior Secured Notes due 2018, and its principal shareholders, that clears the pathway for the continued financing and operations of the musical instruments business as well as a change of control in favor of those noteholders.”
Further on in the statement, CEO Henry Juszkiewicz is credited with declaring, “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.”
Juszkiewicz holds a 36 percent stake in Gibson. An agreement with secured noteholders would help the company repay bank loans as it goes through a “change of control” transaction, according to the company’s filing.
Gibson is to shut down Gibson Innovations, which produces Philips-branded speakers and headphones.
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