Guitar firm Gibson Brands has filed for Chapter 11 bankruptcy protection in the US as the company battles up to an estimated $500 million of debt.
As a result, the Nashville-based firm have announced restructure plans that will see them wind down their consumer audio and home entertainment business and concentrate on musical instruments.
Music Radar report that the restructure plans will give lenders equal ownership of a new company and replace current stockholders, including CEO Henry Juszkiewicz, who will remain in position during the change of control.
A statement reads: “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."
Juszkiewicz adds: “Over the past 12 months, we have made substantial strides through an operational restructuring. 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.
“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.”
A federal judge will have to approve the plans, with reports indicating that 69% of the company's secured lenders support the move.
Gibson’s iconic guitars have been used by artists including Slash, Jimmy Page, B.B. King, Dave Grohl, Angus Young, Joe Bonamassa, Sylvain Sylvain and Johnny Thunders.