Nashville-based Gibson Brands filed for bankruptcy on Tuesday (May 1), citing sharply diminishing sales and continued struggles with its debt load after a series of acquisitions. The 124-year-old company known as the maker of the legendary Les Paul electric guitar, filed for chapter 11 in U.S. Bankruptcy Court in Delaware.
Gibson Brands has more than $500 million in loans due within the next six months. According to a statement from Gibson CEO Henry Juszkiewicz, the majority of Gibson’s creditors (69 percent) have agreed to a restructuring agreement that will allow Gibson to continue operating, as well as refocus on providing musical instruments. As part of that plan, the company will dissolve its Innovations unit, which operates largely outside the United States.
The company also said existing noteholders have agreed to provide $135 million in debtor-in-possession financing.
In addition to guitars, Gibson manufactures instruments under the Dobro, Wurlitzer and Baldwin Piano brands. The company employs nearly 900 people in its Nashville, Memphis, and Bozeman, Montana facilities.
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