Legendary guitar maker Gibson has filed for bankruptcy in the USA. Gibson Brands has a reported debt north of 400 million euros, with its other musical divisions like Epiphone or Wurlitzer also in the doldrums as sales of musical instuments decline.
Once near-ubiquitous in the hands of stars and guitar heroes from the Beatles to Jimi Hendrix to Neil Young and many, many more, the guitar is no longer the instrument of choice for the EDM generation, who are more likely to buy synthesisers or other electronic kit to make music.
Falling sales are not the whole story, though. Gibson Innovations based in the Netherlands, and formerly part of the giant Phillips group, which was bought four years ago, has underperformed and cost Gibson dear.
The news comes via Bloomberg, which offers details on the restructuring agreement: Gibson will undergo a "change of control," which will see CEO Henry Juszkiewicz, who has run the company since 1986, replaced and creditors being given equity in a new company. In exchange, the lenders will provide Gibson with a new $135 million loan so that they can continue operations. This is similar to the deal that was offered by their note-holders back in March.
Juszkiewicz has a colourful reputation as a businessman, a reportedly irascible and temperamental character, he was known for taking his sales execs to a gun range to shoot up Fenders, Gibson's main rival guitar brand. It was his decision to buy the Phillips division.
The company will also "unburden" itself of Gibson Innovations. The filing names the branch as the main source of the company's problems. Brian J. Fox, who will serve as the chief restructuring officer, said when Gibson Innovations lost credit insurance overseas, it became "trapped in a vicious cycle in which it lacked the liquidity to buy inventory and drive sales."
Previously, Juszkiewicz had blamed guitar stores for Gibson's problems, saying they were focusing on catering to professional musicians while ignoring new customers.
“It's all about making the customer feel welcome," he said, "and helping them out by being knowledgeable. That's what the industry needs, because it doesn't have it. ... Kids are out there creating their own music and their own videos. We have to find a way to be a part of their lives. We're losing by not being a part of their lives, and insisting that they become a part of ours.”