Following the news earlier this year that Gibson was running out of time to resolve debt issues, the iconic guitar brand has announced that it is filing for bankruptcy.
In its official statement, Gibson Brands said it plans to re-focus on the manufacturing of its musical instruments and professional audio products by reorganising its core businesses.
“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,” said Gibson.
“To implement the agreement, the Company and its U.S. subsidiaries today filed pre-negotiated reorganization cases under Chapter 11 of the U.S. Bankruptcy Code. The filings will allow the Company’s Musical Instruments and Professional Audio businesses to continue to design, build, sell, and manufacture legendary Gibson and Epiphone guitars, as well as KRK and Cerwin Vega studio monitors and loud speakers, without interruption.
“The Restructuring Support Agreement provides funding for the musical instrument and professional audio businesses, supports the Company’s key vendors, shippers and suppliers, and provides for the restructuring of the Company’s balance sheet.”
Gibson said it will “emerge from Chapter 11 with working capital financing, materially less debt, and a leaner and stronger musical instruments-focused platform” that it says will allow the company and all of its employees, vendors, customers and other critical stakeholders to succeed.
Henry Juszkiewicz, Chairman and Chief Executive Officer of Gibson Brands, and David Berryman, Gibson’sPresident, will both continue at the company to facilitate a smooth transition during this change of control.
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