The Nashville-based company Gibson Brands Inc. announced Tuesday that it is filing for chapter 11 bankruptcy. The decision came as a turnaround plan that gives some of the company’s lenders equity ownership. They are the makers of some of the epochal guitars in the american history and were the suppliers of guitars to legends like B.B. King, Elvis Presley and Pete Townshend.
“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,” said Gibson’s CEO Henry Juszkiewicz in a statement.
Gibson acquired an audio and home entertainment business for $135 million from multinational tech firm Phillips in 2014 which is included as “non-core brands”. The bid which was taken to broaden the company’s presence among music fans will now be wound down according to the company. Gibson’s electronics business had been “trapped in a vicious cycle in which it lacked the liquidity to buy inventory and drive sales.”according to a court filing. The company will continue to operate during its reorientation and bankruptcy proceedings, thanks to agreements it has reached with shareholders and note-holders.
The case is Gibson Brands Inc., 18-11025, U.S. Bankruptcy Court, District of Delaware.