Guitar Center Files for Chapter 11 Bankruptcy
Another giant of the music industry is being marked as a casualty of 2020 as Guitar Center is filing for Chapter 11 bankruptcy. The 61-year old company, which has 269 locations, is the largest music instrument retailer in the United States. It had to close nearly all of its stores in March and struggled to regain footing as they were able to re-open.
The bankruptcy filing will give Guitar Center a break on its debts and allow it to stay in business as it works to fix its problems.
“A restructuring support agreement that Guitar Center announced Nov. 13 calls for new financing backed by existing creditors as well as $165 million in new equity investments from its private equity owner, Ares Management Corp., and Carlyle Group and Brigade Capital Management,” Bloomberg reports.
No store closings have been announced or are currently planned, and the restructuring is to be fully a financial one. The company states their plan will reduce debt by nearly $800 million in addition to the new equity.
“This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth,” says CEO Ron Japinga. “Throughout this process, we will continue to serve our customers and deliver on our mission of putting more music in the world. Given the strong level of support from our lenders and creditors, we expect to complete the process before the end of this year.”
We’ll keep you updated with more information as it unfolds.