Gibson, rock music's favourite guitar brand, faces bankruptcy

Lawrence Kim
February 19, 2018

Gibson Brands, Inc. has recently sold the Baldwin piano brand.

Iconic guitar brand Gibson could be on the brink of bankruptcy, according to a report.

According to the report, the company turns over an annual revenue of more than $1 billion which they describe as "far from normal".

It is also detailed that the company will owe $145 million in bank loans that were issued in 2013, if a range of senior secured notes are not refinanced by July 23rd. It is now looking to see a cash flow boost in the numerous electronics companies it had bought in the last several years.

As Debtwire reporter Reshmi Basu told the Nashville Post, "At the end of the day, someone will take control of this company - be it the debtors or the bondholders..."

CEO Henry Juszkiewicz is thought to be in a race against time to decide whether to exchange the company's debt, look to try and pay it off using his equity or try to declare the company bankrupt.

Now, the legendary company may be facing serious financial struggle, with the Nashville Post reporting that the company may be "running out of time".

Parent company Gibson Brands has been dumping real estate, but the amount realized through the sale of buildings and land is not almost enough to defray the hundreds of millions of dollars owed to investors.

As a publicly-held company, Gibson must report next week its fiscal third quarter numbers to stakeholders, and industry observers are not hopeful, with many noting that Juszkiewicz is in for some hard negotiations.

Founded in 1902, the Gibson company started making electric guitars in 1935 and has gone on to become the weapon of choice for music makers.

It is the iconic Les Paul line, designed by renowned guitarist Les Paul that cemented Gibson Brands, the music industry, becoming a favourite among rock and roll musicians.

Other reports by Click Lancashire

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