Documents have been released detailing the decision, which sees Gibson filing for bankruptcy protection under Chapter 11 of the US Bankruptcy Code. Essentially, filing for Chapter 11 bankruptcy means Gibson will continue to exist as a business, but will enact a Restructuring Support Partnership that transfers ownership to creditors and implements a financial restructuring for each of the 12 companies under Gibson’s name. CEO Henry Juszkiewicz will continue to hold his position in the company for the time being.
In a statement, Gibson said, “Gibson Brands Inc. (“Gibson” or “the Company”), today announced it will be re-focusing the Company on the manufacturing of world-class, musical instruments and professional audio products and the continued development of the Company’s portfolio of iconic, globally-recognised brands including Gibson and Epiphone, by reorganising around its core businesses.
“The Company has reached a “Restructuring Support Agreement” with holders of more than 69.0% in principal amount of its 8.875% Senior Secured Notes due 2018, and its principal shareholders, that clears the pathway for the continued financing and operations of the musical instruments business as well as a change of control in favor of those noteholders.”
The statement goes on to note that the bankruptcy filings will allow Gibson and Epiphone guitars to continue to be sold, as well as KRK and Cerwin Vega studio monitors and loud speakers.
“Over the past 12 months, we have made substantial strides through an operational restructuring,” said CEO Henry Juszkiewicz. “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 assure the company’s long-term stability and financial health.
“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.”
The case was filed yesterday and is awaiting its first hearing early tomorrow in the US. It’s thought that Gibson could owe as much as $500 million, and the motion for bankruptcy could help Gibson retain the corporation. The 12 companies included in the motion are:
- Gibson Brands, Inc.
- Baldwin Piano, Inc.
- Cakewalk, Inc.
- Consolidated Musical Instruments, LLC
- Gibson Cafe & Gallery, LLC
- Gibson International Sales LLC
- Gibson Pro Audio Corp.
- Neat Audio Acquisition Corp.
- Wurlitzer Corp.
- Gibson Innovations USA, Inc.
- Gibson Holdings, Inc.
- Gibson Europe B.V.
Stay tuned to Mixdown for more updates.