Gibson Brands, the makers of rock’s favourite Les Paul, SG and Flying V guitars, has filed for bankruptcy protection citing a “devastating” financial fall after its investments in consumer electronic brands failed to pay off.
The company said in a statement accompanying its chapter 11 bankruptcy filing on Tuesday that it required court protection from creditors to reorganize its business.
The Nashville-based company, which was founded in 1894, said it planned to continue in the business of designing, building and selling musical instruments and equipment, including brands such as Wurlitzer, Dobro and Epiphone, but it would close its arm that makes Philips-branded headphones and other electronic accessories.
“Over the past 12 months, we have made substantial strides through an operational restructuring,” Gibson’s CEO, Henry Juszkiewicz, owner of 36% of the company, said in a statement.
He added that Gibson, which employs 875 workers in Nashville, Memphis and Bozeman, Montana, will “refocus on our core business” of musical instruments, which “we believe will assure the company’s long-term stability and financial health”.
The company said it had debts of between $100m and $500m, including owing at least $100,000 to 26 other companies. It also said it has agreements with holders of more than 69% of its debt that would allow it to continue to operate.
Juszkiewicz bought the company in 1986 for just $5m. He is known as a temperamental executive, once inviting company executives to join him shooting up Fender Stratocasters at a gun range.
As sales fell, Juszkiewicz made the decision to diversify into electronics, leveraging the Gibson name. In another turnaround effort, Juszkiewicz added a self-tuning feature, “G Force”, to the company’s guitars, which consumers roundly rejected.
https://www.theguardian.com/business/2018/may/01/gibson-guitar-firm-files-for-bankruptcy-protection