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Guitar-Maker Gibson Brands Files for Bankruptcy

Gibson files for bankruptcy in order to focus on guitars | The Star

By Austen Hufford
Updated May 1, 2018 8:26 a.m. ET
4 COMMENTS
Storied guitar maker Gibson Brands Inc. filed for bankruptcy protection Tuesday as the company has struggled with its debt load after a series of acquisitions.

The company, which filed for chapter 11 in U.S. Bankruptcy Court in Delaware, said it will continue to operate during the proceedings as it focuses on reorganizing around its core businesses. Gibson plans to wind down its Gibson’s Innovations business, which is largely outside of the U.S.

“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,” Chief Executive Henry Juszkiewicz said in prepared remarks. “Importantly, this process will be virtually invisible to customers.”

The Nashville-based maker of Gibson Les Paul guitars has been struggling with debt it took on to finance acquisitions of home-entertainment and audio-equipment makers years ago. Among businesses the company has added are some of Royal Phillips’s home-entertainment systems, TEAC and Onkyo stereos.

Gibson also makes instruments under a number of brand names including Dobro, Epiphone, Kramer and Tobias. The company also owns a number of historic brands, including Slingerland drums and Wurlitzer pianos.

Gibson said it has reached an agreement with holders of more than 69% of its senior secured notes due in 2018 and shareholders that lets it continue to operate. The company also said existing noteholders have committed to provide $135 million in debtor-in-possession financing.

The company said in the bankruptcy filing that it has debts of between $100 million and $500 million, including owing at least $100,000 to 26 other companies, including many suppliers.

Write to Austen Hufford at [email protected]
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Ouch...well the Gibson Saga goes on. I seriously hope they get on their feet again and focus on quality and what players want. It's ok to try to innovate, but it should be a very small part of their business IMO.
 

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Glad this happening sooner than later and that the focus will be on its core musical instrument business
 
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Glad this happening sooner than later and that the focus will be on its core musical instrument business
Same. Wonder how this will affect pre-bankruptcy values of Gibson guitars. I think they'll go up in value until people see if compromises will be made in producing post-bankruptcy models. I also wonder if there will be a production pause while they sort things out.
 

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Same. Wonder how this will affect pre-bankruptcy values of Gibson guitars. I think they'll go up in value until people see if compromises will be made in producing post-bankruptcy models. I also wonder if there will be a production pause while they sort things out.
It would be excruciatingly stupid of them to make any compromises in terms of quality at this point. People will be expecting things to either remain the same or improve.
 

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Ouch...well the Gibson Saga goes on. I seriously hope they get on their feet again and focus on quality and what players want. It's ok to try to innovate, but it should be a very small part of their business IMO.
Innovations is always good but I agree that quality should be paramount. When we look back on the history of the electric guitar, there is not a whole lot of innovation that has gone on. The basic electric guitar has not changed in decades. Godin is likely the most innovative companies, I have seen since starting to play 20 years ago.
 

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I can't tell from the wording if Henry is staying or going, or staying for a bit then going. He was both the best thing and the worst thing that happened to the company. When he took over at first he did some great things and then he lost his mind going for the "lifestyle" thing.
 

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I can't tell from the wording if Henry is staying or going, or staying for a bit then going. He was both the best thing and the worst thing that happened to the company. When he took over at first he did some great things and then he lost his mind going for the "lifestyle" thing.
I think this is sort of a severance type thing. One year as CEO while they come out of Chapter 11, is what I've read. He'll have to hit some pretty strict targets, I imagine.
 

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Discussion Starter #12 (Edited)
It looks like Henry could be out, eventually. Seeing there is a compensation package on the table, it appears Henry sees the writing on the wall and knows he'll be gone or wants to wash his hands of the business but wants to keep his yacht and vacation homes.

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Juszkiewicz, who has found himself at odds with creditors in recent months, will continue with the company upon emergence from bankruptcy “to facilitate a smooth transition,” according to the agreement. Court papers call for a one-year consulting deal and compensation package for Juszkiewicz. A representative for the company didn’t immediately respond to questions about whether Juszkiewicz will remain as CEO or in a separate role.
 

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Innovations is always good but I agree that quality should be paramount. When we look back on the history of the electric guitar, there is not a whole lot of innovation that has gone on. The basic electric guitar has not changed in decades. Godin is likely the most innovative companies, I have seen since starting to play 20 years ago.
Well, it seems like guitar players don't like innovations on their guitars. Innovatives guitars were never really that popular, except for players with endorsements :p
 

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It looks like Henry could be out, eventually. Seeing there is a compensation package on the table, it appears Henry sees the writing on the wall and knows he'll be gone or wants to wash his hands of the business but wants to keep his yacht and vacation homes.

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Juszkiewicz, who has found himself at odds with creditors in recent months, will continue with the company upon emergence from bankruptcy “to facilitate a smooth transition,” according to the agreement. Court papers call for a one-year consulting deal and compensation package for Juszkiewicz. A representative for the company didn’t immediately respond to questions about whether Juszkiewicz will remain as CEO or in a separate role.
Reading between the lines, that sure sounds like he's out, but with a bit of an ego cushion.
 

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From BBC news/business... "It aims to exit bankruptcy protection on 24 September."
 
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