Gibson files for bankruptcy in order to renew business

Gibson Brands Inc. has disclosed in a press release that it has reached a "Restructuring Support Agreement" with holders which clears the pathway for the continued financing and operations of the musical instruments business. However, to implement the agreement, Gibson along with its US subsidiaries has filed pre-negotiated reorganisation cases under Chapter 11 of the US Bankruptcy Code. The filings will allow the Company's Musical Instruments and Professional Audio businesses to continue to design, build, sell, and manufacture Gibson and Epiphone guitars, as well as KRK and Cerwin Vega studio monitors and loud speakers, without interruption. “Gibson will emerge from Chapter 11 with working capital financing, materially less debt, and a leaner and stronger musical instruments-focused platform that will allow the Company and all of its employees, vendors, customers and other critical stakeholders to succeed,” the company states in the press release. The Company's Gibson Innovations business, which is largely outside of the US and independent of the Musical Instruments business, will be wound down. The wind-down of the Company's GI Business is not expected to impact the Company's reorganization around its core Musical Instruments/Pro Audio business. The innovation business is the former Philips WOOX Innovations, which Gibson acquired back in 2014. The unit made consumer audio products such as headphones. "Over the past 12 months, we have made substantial strides through an operational restructuring," Henry Juszkiewicz, Chairman and Chief Executive Officer, says in the press release. "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.”