Gibson has filed for Chapter 11 bankruptcy protection, the company announced today. The filing—which was first reported by Bloomberg, comes with a turnaround plan that will transfer equity ownership of the company to its principal lenders.
In addition to this restructuring, Gibson will receive $135 million from those same lenders in order to keep the company's instrument manufacturing division in business during the transition.
The ownership change will shift control from current stockholders such as Chief Executive Officer Henry Juszkiewicz to noteholders that include Silver Point Capital, Melody Capital Partners and funds affiliated with KKR Credit Advisors, according to court filings obtained by Bloomberg.
Gibson's Innovations business, which it bought in 2014 from Koninklijke Philips NV, will be wound down, according to the company.
According to court filings, Gibson Innovations was the source of a number of financial problems for Gibson Brands, and had been facing significant declines in sales.
"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," the company said in a press release.
Gibson was founded in 1894, and sells over 170,000 guitars annually in 80 countries.