The maker of a cherished rock mainstay is seeking bankruptcy protection after diversification led to ‘devastating’ financial fall

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This article is more than 1 year old

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Gibson Brands, the makers of rock’s favourite Les Paul, SG and Flying V guitars, has filed for bankruptcy protection citing a “devastating” financial fall after its investments in consumer electronic brands failed to pay off.

The company said in a statement accompanying its chapter 11 bankruptcy filing on Tuesday that it required court protection from creditors to reorganize its business.

The Nashville-based company, which was founded in 1894, said it planned to continue in the business of designing, building and selling musical instruments and equipment, including brands such as Wurlitzer, Dobro and Epiphone, but it would close its arm that makes Philips-branded headphones and other electronic accessories.

“Over the past 12 months, we have made substantial strides through an operational restructuring,” Gibson’s CEO, Henry Juszkiewicz, owner of 36% of the company, said in a statement.

Facebook Twitter Pinterest Pete Townshend of the Who performs live playing a Gibson Les Paul guitar. Photograph: Graham Wiltshire/Redferns

He added that Gibson, which employs 875 workers in Nashville, Memphis and Bozeman, Montana, will “refocus on our core business” of musical instruments, which “we believe will assure the company’s long-term stability and financial health”.

The company said it had debts of between $100m and $500m, including owing at least $100,000 to 26 other companies. It also said it has agreements with holders of more than 69% of its debt that would allow it to continue to operate.

Juszkiewicz bought the company in 1986 for just $5m. He is known as a temperamental executive, once inviting company executives to join him shooting up Fender Stratocasters at a gun range.

As sales fell, Juszkiewicz made the decision to diversify into electronics, leveraging the Gibson name. In another turnaround effort, Juszkiewicz added a self-tuning feature, “G Force”, to the company’s guitars, which consumers roundly rejected.

Facebook Twitter Pinterest Bob Marley performs on stage with the Wailers at Houtrust Hallen in The Hague, Netherlands, playing a Gibson Les Paul Special guitar. Photograph: Gijsbert Hanekroot/Redferns

“Everything we do is about music,” Juszkiewicz told the Washington Post last year.

“It doesn’t matter whether it’s the making of music with instruments or the listening of music with a player. To me, we’re a music company. That’s what I want to be. And I want to be number one. And, you know, nobody else seems to be applying for the job right now.”

Over the past several years, Gibson’s annual revenue has fallen from $2.1bn to $1.7bn in 2017. The company’s 2014 purchase of Philips’s audio division for $135m proved to be a poor decision and led to Moody’s downgrading the company in 2016.

The turmoil afflicting the maker of guitars favored by Neil Young, Jimmy Page and Slash is a common story across the industry.

Over the past decade, electric guitar sales have plummeted, from about 1.5m sold annually to around 1m. In 2010, sales of acoustic guitars outstripped electric. Some industry analysts thank Taylor Swift for that shift.

Like Gibson, Fender, which had to abandon a public offering in 2012, has struggled under debt. The US’s largest retail guitar supplier, Guitar Center, recently had its corporate credit rating downgraded to junk status by S&P after racking up debts of $1.6bn.

According to Digital Music News, “younger buyers, who once drove the guitar surge, have now shifted towards [EDM], rap and less guitar-driven indie music – even though interest in music itself has never been higher”.

Facebook Twitter Pinterest Jimmy Page of Led Zeppelin bows his Gibson Les Paul guitar at Madison Square Garden. Photograph: Richard E Aaron/Redferns

Last year legendary Nashville guitar dealer George Gruhn told the Washington Post that the industry’s troubles stemmed from a flat market and competition from more numerous copies of the classics.

But fundamentally, he said, the generation that aspired to be rock guitar gods like Led Zepplin’s Page have lost their mojo. Despite the success of Jack White, Gary Clark Jr and analog-rock bands like The Black Keys, the new generation of musicians are more likely to be masters of DJ technology like Ableton.

“What we need is guitar heroes,” Gruhn explained.

</s>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 favoured the 1989 Gibson L4 when he fronted Tin Machine whereas Slash is another fan.</s>The company, founded in 1894 and which also makes the Epiphone and Wurlitzer pianos, wrestled with debt for years.

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

Gibson was founded in 1894 and is based in Nashville. 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.</s>NASHVILLE – The maker of the Gibson guitar, omnipresent for decades on the American music stage, is filing for bankruptcy protection after wrestling for years with debt.

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

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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 favoured the 1989 Gibson L4 when he fronted Tin Machine. Slash swears by them.

Gibson, founded in 1894 and based in Nashville, Tennessee, has the top market share in premium guitars. It sells more than 170,000 guitars a year in more than 80 countries, including more than 40 per cent of all electric guitars that cost more than $2,000, according to a bankruptcy filing.

The company has already sold off some noncore brands, acquisitions that contributed to its burdensome debt load. Gibson has begun the liquidation process for its debt-plagued, struggling international Gibson Innovations division, which sells headphones, speakers, accessories and other electronics.

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“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,” Henry Juszkiewicz, Gibson chairman and CEO, said in a news release.

Gruhn, an expert on guitars of all kinds, said the company’s bankruptcy was predictable after it expanded into the home electronics business. But that doesn’t mean the Gibson brand will simply go away, Gruhn added.

“The brand name and company’s reputation for making guitars is tarnished, but not dead by any means, and it’s very much capable of being resuscitated.”

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In the hands of musicians from B.B. King to Eric Clapton, Jimmy Page, Duane Allman and Slash, Gibson’s electric guitars have been a foundational element of blues and rock. King’s signature guitar, “Lucille,” was a Gibson.

Legendary jazz guitar player Charlie Christian made history playing a Gibson ES-150 – one of the first ever electric guitars – through an amplifier with the Benny Goodman orchestra. The later big-bodied Gibson jazz guitars have been in the arsenal of many great players since then, such as Wes Montgomery and Joe Pass.

One of the only known photographs of iconic Delta blues pioneer Robert Johnson shows him with a Gibson L-1 guitar.

And folk-revival of the 1950s and 60s wouldn’t have sounded quite so mellow without battalions of steel-string Gibson acoustic guitars among the Martins and Guilds.

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.

Eric Clapton played the solo on the Beatles’ “While My Guitar Gently Weeps” on a Gibson guitar he borrowed from George Harrison, according to GuitarWorld.com. And Jimmy Page, the legendary guitarist for blues rockers Led Zeppelin, was and remains a longtime Gibson loyalist.

“It’s hard to name any guitar players who play electric or steel-string acoustics who don’t own a Gibson,” said Gruhn, the Nashville guitar expert.

Associated Press writer Don Schanche Jr. in Atlanta contributed to this story.</s>(Samuel M. Simpkins/The Tennessean via AP, File). FILE - In this Aug. 25, 2011 file photo, Gibson Guitar CEO Henry Juszkiewicz speaks at the plant in Nashville, Tenn. The maker of the Gibson guitar, an omnipresent icon in American rock ‘n’ roll, is fil...

(AP Photo/Peter Dejong, File). FILE - In this June 17, 2016, file photo, Henry Juszkiewicz, CEO of Gibson Brands, poses for a portrait with a Gibson Custom L-5 guitar during the official opening of the European hub of Gibson Brands at the A'dam Tower i...

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

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

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.

"It is one of the most widely recognized brand names on planet Earth," said George Gruhn of Gruhn Guitars, a world-famous vintage instrument store.

Gibson, founded in 1894 and based in Nashville, Tennessee, has the top market share in premium guitars. It sells more than 170,000 guitars a year in more than 80 countries, including more than 40 percent of all electric guitars that cost more than $2,000, according to a bankruptcy filing.

The company has already sold off some noncore brands, acquisitions that contributed to its burdensome debt load. Gibson has begun the liquidation process for its debt-plagued, struggling international Gibson Innovations division, which sells headphones, speakers, accessories and other electronics.

"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," Henry Juszkiewicz, Gibson chairman and CEO, said in a news release.

Gruhn, an expert on guitars of all kinds, said the company's bankruptcy was predictable after it expanded into the home electronics business. But that doesn't mean the Gibson brand will simply go away, Gruhn added.

"The brand name and company's reputation for making guitars is tarnished, but not dead by any means, and it's very much capable of being resuscitated."

In the hands of musicians from B.B. King to Eric Clapton, Jimmy Page, Duane Allman and Slash, Gibson's electric guitars have been a foundational element of blues and rock. King's signature guitar, "Lucille," was a Gibson.

Legendary jazz guitar player Charlie Christian made history playing a Gibson ES-150 - one of the first ever electric guitars - through an amplifier with the Benny Goodman orchestra. The later big-bodied Gibson jazz guitars have been in the arsenal of many great players since then, such as Wes Montgomery and Joe Pass.

One of the only known photographs of iconic Delta blues pioneer Robert Johnson shows him with a Gibson L-1 guitar.

And folk-revival of the 1950s and 60s wouldn't have sounded quite so mellow without battalions of steel-string Gibson acoustic guitars among the Martins and Guilds.

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.

Eric Clapton played the solo on the Beatles' "While My Guitar Gently Weeps" on a Gibson guitar he borrowed from George Harrison, according to GuitarWorld.com. And Jimmy Page, the legendary guitarist for blues rockers Led Zeppelin, was and remains a longtime Gibson loyalist.

"It's hard to name any guitar players who play electric or steel-string acoustics who don't own a Gibson," said Gruhn, the Nashville guitar expert.

Associated Press writer Don Schanche Jr. in Atlanta contributed to this story.

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.</s>Gibson Brands, Inc. has filed for bankruptcy protection. The iconic guitar maker filed for Chapter 11 bankruptcy protection earlier today, as Bloomberg reports, with a “change of control” transaction to shift ownership of the company from current stockholders (including CEO Henry Juszkiewicz) to its lenders (which include investment firms like Melody Capital Partners and Silver Point Capital).

The decision follows years of financial challenges facing the company, with the company owing much of that to its ill-fated “consumer electronics” division Gibson Innovations. That division was established in 2014 following Gibson’s acquisition of WOOX Innovations, the audio, video, multimedia, and accessories business of Philips. That division will be liquidated, according to Bloomberg, with Gibson refocusing its efforts on its core musical instruments business. As Variety notes, Juszkiewicz says the restructuring “will be virtually invisible to customers, all of whom can continue to rely on Gibson to provide unparalleled products and customer service.”

Gibson was founded in 1903 in Kalamazoo, Michigan. It recently moved out of its Nashville offices, where it had operated since the mid 1980s. Several of their guitar models, including the Les Paul, SG, ES-335, and others are ubiquitous in rock and popular culture.</s>Gibson guitar, an iconic presence 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, the Associated Press reports.

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

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.</s>NASHVILLE, Tenn. (AP) — Gibson guitars have been such a fixture in music history that Chuck Berry was laid to rest with his, B.B. King affectionately named his “Lucille,” and Eric Clapton borrowed one from George Harrison to play the solo on the Beatles’ “While My Guitar Gently Weeps.”

The maker of the iconic instrument, a constant across generations of American music, filed for bankruptcy protection Tuesday (May 1) after wrestling for years with debt. The decision came with an assurance from Gibson that it is refocusing on its specialty, musical instruments, and moving away from its debt-plagued push to sell home electronics.

In the hands of musicians from Jimmy Page to Duane Allman and Slash, Gibson’s electric guitars have been a foundational element of blues and rock.

Legendary jazz guitar player Charlie Christian made history playing a Gibson ES-150 — one of the first ever electric guitars — through an amplifier with the Benny Goodman orchestra. The later big-bodied Gibson jazz guitars have been in the arsenal of many great players since then, such as Wes Montgomery and Joe Pass.

“It’s hard to name any guitar players who play electric or steel-string acoustics who don’t own a Gibson,” said George Gruhn of Gruhn Guitars, a world-famous vintage instrument store in Nashville.

One of the only known photographs of iconic Delta blues pioneer Robert Johnson shows him with a Gibson L-1 guitar.

And the folk revival of the 1950s and 1960s wouldn’t have sounded quite so mellow without battalions of steel-string Gibson acoustic guitars among the Martins and Guilds.

Elvis Presley didn’t start out with a Gibson but he went on to own and play many of them, according to the website for Graceland, his Memphis home.

And Jimmy Page, the legendary guitarist for blues rockers Led Zeppelin, was and remains a longtime Gibson loyalist. David Bowie favored the 1989 Gibson L4 when he fronted Tin Machine. Slash swears by them.

Gibson, founded in 1894 and based in Nashville, Tennessee, has the top market share in premium electric guitars. It sells more than 170,000 guitars a year in more than 80 countries, including more than 40 percent of all electric guitars that cost more than $2,000, according to a bankruptcy filing.

The pre-negotiated reorganization plan filed Tuesday will allow Gibson Brands Inc. to continue operations with $135 million in financing from lenders.

Gibson has already sold off some non-core brands, acquisitions that contributed to its burdensome debt load. Gibson has begun the liquidation process for its struggling international Gibson Innovations division, which sells headphones, speakers, accessories and other electronics.

“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,” Henry Juszkiewicz, Gibson chairman and CEO, said in a news release.

Gruhn, an expert on guitars of all kinds, said the company’s bankruptcy was predictable after it expanded into the home electronics business. But he noted that doesn’t mean the Gibson brand will simply fade away.

“The brand name and company’s reputation for making guitars is tarnished, but not dead by any means, and it’s very much capable of being resuscitated,” Gruhn said.

File- This April 9, 2017, file photo shows a Gibson ES-335 is attached to the lid of Chuck Berry’s casket during a celebration of life for the rock ‘n’ roll legend in St. Louis. The maker of the Gibson guitar, omnipresent for decades on the American music stage, is filing for bankruptcy protection after wrestling for years with debt. A pre-negotiated reorganization plan filed Tuesday, May 1, 2018, will allow Gibson Brands Inc. to continue operations with $135 million in financing from lenders. (AP Photo/Jeff Roberson, File) File- This April 9, 2017, file photo shows a Gibson ES-335 is attached to the lid of Chuck Berry’s casket during a celebration of life for the rock ‘n’ roll legend in St. Louis. The maker of the Gibson guitar, omnipresent for decades on the American music stage, is filing for bankruptcy protection after wrestling for years with debt. A pre-negotiated reorganization plan filed Tuesday, May 1, 2018, will allow Gibson Brands Inc. to continue operations with $135 million in financing from lenders. (AP Photo/Jeff Roberson, File) FILE – In this Aug. 8, 2013, file photo, Blues music legend B.B. King performs on Frampton’s Guitar Circus 2013 Tour at Pier Six Pavilion, in Baltimore. The maker of the Gibson guitar, omnipresent for decades on the American music stage, is filing for bankruptcy protection after wrestling for years with debt. A pre-negotiated reorganization plan filed Tuesday, May 1, 2018, will allow Gibson Brands Inc. to continue operations with $135 million in financing from lenders.. (Photo by Owen Sweeney/Invision/AP, File) FILE – In this Aug. 8, 2013, file photo, Blues music legend B.B. King performs on Frampton’s Guitar Circus 2013 Tour at Pier Six Pavilion, in Baltimore. The maker of the Gibson guitar, omnipresent for decades on the American music stage, is filing for bankruptcy protection after wrestling for years with debt. A pre-negotiated reorganization plan filed Tuesday, May 1, 2018, will allow Gibson Brands Inc. to continue operations with $135 million in financing from lenders.. (Photo by Owen Sweeney/Invision/AP, File) FILE – In this June 17, 2016, file photo, Henry Juszkiewicz, CEO of Gibson Brands, poses for a portrait with a Gibson Custom L-5 guitar during the official opening of the European hub of Gibson Brands at the A’dam Tower in Amsterdam, Netherlands. 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. (AP Photo/Peter Dejong, File) FILE – In this June 17, 2016, file photo, Henry Juszkiewicz, CEO of Gibson Brands, poses for a portrait with a Gibson Custom L-5 guitar during the official opening of the European hub of Gibson Brands at the A’dam Tower in Amsterdam, Netherlands. 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. (AP Photo/Peter Dejong, File)</s>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 pre-negotiated reorganization plan filed Tuesday will allow Gibson Brands Inc. to continue operations with $135 million in financing from lenders.

 

 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.

(Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)</s>The maker of the Gibson guitar has filed for bankruptcy protection after wrestling for years with debt. Gibson guitars have been esteemed by generations of guitar legends.

Gibson guitars have been synonymous with 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 favoured the 1989 Gibson L4 when he fronted Tin Machine. Other fans include former Guns N’ Roses guitarist Slash and Pete Townshend of The Who.

Gibson, whose legendary brands include Les Paul and SG, has been suffering under $500 million in debt linked to the acquisition of its consumer electronics business overseas, where sales have been in sharp decline.

A reorganisation plan filed on Tuesday will allow Gibson to continue operations with €135 million in financing from lenders.

Gibson was founded in 1894 and is based in Nashville, Tennessee. It makes its electric guitars in Nashville and Memphis, while its acoustic guitars are made in Bozeman, Montana. It sells more than 170,000 guitars annually in more than 80 countries. It also makes the Epiphone and Wurlitzer pianos.

The company has already sold off some non-core brands, acquisitions that contributed to its debt load.

It bought the Hong Kong-based consumer electronics arm from Philips in 2014, and started to wind down the unsuccessful business – including formal liquidation proceedings in Hong Kong, the UK and six European countries – on April 30th, according to court papers. Gibson said it plans to exit bankruptcy in September.
United States guitar manufacturer Gibson files for bankruptcy protection.