Gibson Guitar Maker Files for Bankruptcy Protection

Lenders will be providing a loan of "up to $135 million" to help Gibson stay in business and move into this next stage.

Two months ago, the Nashville Post reported that legendary guitar company Gibson may be filing for bankruptcy.

Gibson guitars have been synonymous with generations of guitar legends. David Bowie favoured the 1989 Gibson L4 when he fronted Tin Machine. Slash swears by them.

Gibson Guitar CEO Henry Juszkiewicz on the government's investigation into the wood used in its guitars.

Gibson, founded in 1894, sells over 170,000 guitars annually in 80 countries.

The company has already sold off some noncore brands, acquisitions that contributed to its burdensome debt load.

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According to a court statement from Brian J. Fox, the managing director at Alvarez & Marsal, said the business of Gibson Innovations was acquired in 2014 June from Koninklijke Philips NV, who was the source of its financial woes.Acquired through a leveraged transaction, the business faced significant sales declines due in part to a loss of credit insurance overseas.

The company, which filed for chapter 11 in U.S. Bankruptcy Court in DE, said it will continue to operate during the proceedings as it focuses on reorganizing around its core businesses.

To implement the agreement, the company and its USA subsidiaries today filed pre-negotiated reorganization cases under Chapter 11 of the US bankruptcy code. Like the Gibson Robot Guitar, a self-tuning guitar that took a decade and million of dollars to develop.

James Alan Hetfield, rhythm guitarist with Metallica uses a white Gibson "Flying V"; Keith Richards of The Rolling Stones had a custom Les Paul; and Jimmy Page of Led Zeppelin also played a Gibson Les Paul.

One of the only known photographs of iconic Delta blues pioneer Robert Johnson shows him with a Gibson L-1 guitar. Several of their guitar models, including the Les Paul, SG, ES-335, and others are ubiquitous in rock and popular culture. But with the shift to electronically driven and created music, it remains to be seen if Gibson can effectively renew its appeal and reclaim the heights as one of the world's most iconic music brands.

Elvis Presley didn't start out with a Gibson but owned and played many of them, according to the website for Graceland, his Memphis home.

(Copyright © 2015. All Rights Reserved.)
 
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