Gibson files for bankruptcy

[Rmz76]

Originally Posted by Goat Whiskey Picks

For a large corporation filing bankruptcy is a way to restructure debt, lower interest rates and ultimately come out much leaner more profitable. It's not a devastating move like it would be for an average Joe like me. With some of the bad business decisions that Gibson has made this is likely the best way for them to refocus and begin to thrive again.

Yes, but it's also possible the debt holders who will loose on restructuring can force them into liquidation. On shakey ground until the plan gets approval and clears the court. It could go either way...

[JBCROTTY]

This was inevitable and unavoidable.

The debt holders will force management changes and install their own senior team to restructure the company. They will shed (either through closing or selling) all non-core businesses and assets. They will focus on the core guitar-making business and use the filing to restructure it financially and operationally.

The only way they will sell the core guitar making business is if they feel they can make more money selling it than restructuring and operating it. They will get offers for it, but if they can successfully restructure that core business and shed most of the debt, and if they feel they can operate it going forward with good earnings and profits, perhaps they won't sell that portion of the business.

[jjrpilot]

I hope and am pretty sure they'll survive this....but on the off chance that a foreign company did buy them and possibly outsource the guitar making outside of the USA.....I'm betting you'll see a slight rush on "American Made" Gibsons.............

[jomaynor]

Originally Posted by KevWind

One of articles I read mentioned that he might be restructured out of the decision making equation , we will see

Yes, and since the restructuring terms mean that, in effect, Juszkiewicz has lost absolute control of the company, it's likely that the new board will force to him resign as CEO, either sooner or later.

[SMan]

This comes as a shock!
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.NOT!

A reboot without Henry may help. Debt (from poor management decisions) has killed many a good company.

[jwguitar]

Originally Posted by M19

https://www.wsj.com/articles/guitar-...tcy-1525177170

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]

At least they reached an agreement to continue on and restructure their debt. I would hate to see Gibson disappear completely. They are the only guitars that even the non-guitarist knows about.

[mcduffnw]

Originally Posted by Goat Whiskey Picks

For a large corporation filing bankruptcy is a way to restructure debt, lower interest rates and ultimately come out much leaner more profitable. It's not a devastating move like it would be for an average Joe like me. With some of the bad business decisions that Gibson has made this is likely the best way for them to refocus and begin to thrive again.

It's NOT a devastating move for an average Joe like you either.

It's the same thing for the average Joe as it is for Gibson...basically...just much smaller $$$numbers to deal with.

A lot of "average Joe's" have been shamed into thinking it is a bad thing for them to do, by bankers, and financial brokers, mortage brokers, car finance brokers...etc.

It's not...UNLESS...you are trying to hide/shield assets from creditors and/or the IRS. Then...it is a BAD idea, as you are going to get found out and then the real trouble begins.

duff
Be A Player...Not A Polisher

[AndyC]

Originally Posted by jwguitar

They are the only guitars that even the non-guitarist knows about.

In your humble opinion of course - I would beg to differ.

[stephenT]

That would be difficult to say no at 99% off, but i owned a early 2000s L-00 14 fret. Did it for me. Weirdest acoustic I owned. Put a set of strings on one day and the next day they'd be dead with very little playing time. After a handful of string changes, the Gibson was sold.

Originally Posted by PearlJamNoCode

I feel the same way, but if they're forced to liquidate their 12 fret L-00 stock at 99% off, I'd be first in line.

[jjrpilot]

Originally Posted by stephenT

That would be difficult to say no at 99% off, but i owned a early 2000s L-00 14 fret. Did it for me. Weirdest acoustic I owned. Put a set of strings on one day and the next day they'd be dead with very little playing time. After a handful of string changes, the Gibson was sold.

Maybe the humidity in your house was off? Not sure I've ever heard about a guitar needing a string change in 2 days...

[Mycroft]

Originally Posted by PorkPieGuy

Gibson's brand is so widespread and (mostly) respected, another company will probably snatch them up...I'd say within a few weeks (if not sooner).

This is Chapter 11, Reorganization, not Chapter 13, Liquidation, it the filing is allowed.

The companies major secured creditors are asking to take equity (stock) in the instrument part of the company in return for loans to help with the debt for the non-instrument part. This will also involve the sale (likely) of those parts, and negotiations with other creditors over what they are owed. Unsecured creditors are likely nto push for liquidation, because they are more likely to get more of their investment back. Henry is likely to leave, eventually.

So, unless liquidated, there is nothing to "snatch up." If liquidation comes, you bet, someone will.

So we will have another dividing line in the storied history of Gibson. Like the "Norlin Era" we will now have the post "Henry Era..."

[mcduffnw]

Originally Posted by jwguitar

At least they reached an agreement to continue on and restructure their debt. I would hate to see Gibson disappear completely. They are the only guitars that even the non-guitarist knows about.

I would agree with you...if...you also add Martin Guitars to that list.

duff
Be A Player...Not A Polisher

[mcduffnw]

Originally Posted by Mycroft

This is Chapter 11, Reorganization, not Chapter 13, Liquidation, it the filing is allowed.

The companies major secured creditors are asking to take equity (stock) in the instrument part of the company in return for loans to help with the debt for the non-instrument part. This will also involve the sale (likely) of those parts, and negotiations with other creditors over what they are owed. Unsecured creditors are likely nto push for liquidation, because they are more likely to get more of their investment back. Henry is likely to leave, eventually.

So, unless liquidated, there is nothing to "snatch up." If liquidation comes, you bet, someone will.

So we will have another dividing line in the storied history of Gibson. Like the "Norlin Era" we will now have the post "Henry Era..."

Now...where this all could get really dangerously interesting for Gibson, and Martin, and Taylor...and a WHOLE giant bunch of MI Retail companies, is if Guitar Center files for Chapter 11 Banko...which it appears they are almost imminently certain to do.

THAT would really roil the waters of the entire MI Retail world.

duff
Be A Player...Not A Polisher

[HodgdonExtreme]

Frankly, this is good news for Gibson.

Gibson has been bogged down and committed to many poor choices. Chapter 11 allows them to renegotiate their existing contracts; keep the good, ditch the bad and emerge with a revised/profitable business model.

[815C]

Wow...

http://variety.com/2018/biz/news/gib...on-1202793510/