Juszkiewicz added that the restructuring process will be "virtually invisible" to customers, who "can continue to rely on Gibson to provide unparalleled products and customer service".
Gibson Guitar CEO Henry Juszkiewicz on the government's investigation into the wood used in its guitars.
According to the papers which are filed on Tuesday, an agreement with a restructuring support has been made along with the suggestion of with senior secured note holders who will help it to repay bank loans while going through a "change of control" transaction. 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. According to court filings, current noteholders include Silver Point Capital, Melody Capital Partners and funds affiliated with KKR Credit Advisors. It also manufacturers other musical equipment, including amps, turntables and more.
Various factors may be affecting the shrinking electric guitar market. The new structure will also be allowing the instrument business to move itself out of consumer electronics unit which Gibson had blamed for being its financial woes.In 1894, Gibson was founded which was selling over 170,000 guitars annually in 80 countries. Juszkiewicz purchased a line of Japanese consumer electronics in 2014 as part of a plan to rebrand and relaunch Gibson Guitars as a "music lifestyle" company. This left the company with looming loan debts and not enough earnings to cover them.
The reorganization will center around the company's core musical Instruments and pro audio business.
The company, which filed for chapter 11 in U.S. Bankruptcy Court in DE, said it will continue to operate during the proceedings as it focuses on reorganizing around its core businesses.
The company issued an official statement this morning regarding its decision to enter bankruptcy protection.
While filing for bankruptcy is hardly on any business's bucket list, this restructuring deal seems to be a best-case scenario for Gibson's customers.
But in the past two decades, the Nashville company also started creating interesting concepts that ultimately flopped in the marketplace.