Guitar Legend Gibson Seeks Bankruptcy Protection

The Associated Press

NASHVILLE, Tenn. (AP) – The maker of the Gibson guitar, omnipresent for decades on the American rock 'n' roll stage, is filing for bankruptcy protection after wrestling for years with debt.

Gibson guitars have been esteemed by generations of guitar legends. After Chuck Berry died, his beloved cherry-red Gibson guitar was bolted to the inside of his coffin lid. David Bowie favored the 1989 Gibson L4 when he fronted Tin Machine. Slash swears by them.

A prenegotiated reorganization plan filed Tuesday will allow Gibson Brands Inc. to continue operations with $135 million in financing from lenders.

In an announcement about the bankruptcy protection, the company said the Chapter 11 filings will allow it to "continue to design, build, sell, and manufacture legendary Gibson and Epiphone guitars, as well as KRK and Cerwin Vega studio monitors and loud speakers, without interruption."

Gibson was founded in 1894 and is based in Nashville, Tennessee. It also makes the Epiphone and Wurlitzer pianos.

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

It also unloaded its Downtown Memphis property in January, selling the Gibson Guitar Factory and Showroom at 145 Lt. George W. Lee Ave. to New York-based real estate investment firm Somera Road Inc. for $14.4 million.

On Monday, April 1, Somera Road announced it had partnered with Orgel Family LP, the Memphis-based company owned by Billy Orgel and Benjamin Orgel, on a plan to reposition the Downtown property. Gibson currently is leasing the property, but the partners said they have received "substantial interest" from a range of other potential users.

Along with selling off noncore brands, Gibson said it plans to wind down its Gibson Innovations business, which was formed when Gibson acquired Philips’ audio and home entertainment business, Woox Innovations, in 2014. The division largely operates outside the U.S. 

Henry Juszkiewicz, chairman and CEO of Gibson Brands, said the company has made "substantial strides" through an operational restructuring during the past year.

"We have sold noncore brands, increased earnings and reduced working capital demands," Juszkiewicz said in a written statement. "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.

"Importantly, this process will be virtually invisible to customers, all of whom can continue to rely on Gibson to provide unparalleled products and customer service."

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The Daily News contributed to this report.