Gibson files for bankruptcy
LOOMING MATURITIES on approximately 0 million in debt have forced Gibson Brands to file for chapter 11 bankruptcy protection on May 1.
Under a proposed reorganization plan, the company will liquidate the consumer electronics business it acquired from Philips in June of 2014 and focus its resources on its musical instrument business, which includes the Gibson and Epiphone guitar brands, and the KRK and Stanton audio brands, according to documents filed in a Delaware court. Court filings indicate that 69% of the bond holders have agreed in principle to provide 5 million in debtor-in-possession financing to fund the continuing operation of the musical instrument business during the bankruptcy proceedings.
Court filings indicate that Gibson's core musical instrument and pro audio businesses are financially viable unlike the struggling consumer electronics division, which operates under the Gibson Innovation banner.
Henry Juskiewicz said of the bankruptcy proceedings, "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. 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 ensure the company's long-term stability and financial health."