Gibson Brands, the iconic American music audio & instrument manufacturing company that makes Gibson Guitars and other pieces of equipment, has filed for chapter 11 bankruptcy protection.
According to bankruptcy papers filed in Delaware, Gibson will repay bank loans while going through a "change of control" transaction according to Bloomberg. The company owes as much as $500 million in debt and will get another $135 million from creditors to keep it in business.
Maker of iconic guitars for some of the biggest rock, blues and jazz musicians in the world, Gibson has run into some major financial problems in recent times. Founded in 1894, the company has grown into a brand with guitars like the Gibson's guitars include the Les Paul, SG, Flying V, Explorer, J-45 and Hummingbird used by Elvis Presley, BB King, Keith Richards, Pete Townshend and Lenny Kravitz, among others. It claims market share among guitars above $2,000 according to USA Today.
However that market has started to shrink and they made some risky and expensive moves into electronics and audio equipment space that have not panned out as they had hoped.
Now begins the process of getting out from underneath this debt and we will see how the company is reshaped once it is done with Chapter 11.