Gibson Brands Inc, the maker of some of America’s most famous electric and acoustic guitars, has filed for bankruptcy. The Nashville-based company announced Tuesday that it is filing for chapter 11 bankruptcy and working on “re-focusing, reorganizing and restructuring” by shedding some of its side businesses and concentrating on its original mission of selling musical instruments.
Gibson CEO Henry Juskiewicz said in a statement, “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 “non-core brands” that the company has shed in an effort to lessen its massive debt include an audio and home entertainment business that Gibson acquired for $135 million from multinational tech firm Phillips in 2014.
The purchase was made as a bid to broaden the company’s presence among music fans, which the company says will now “be wound down.”
Gibson will continue to operate during its reorganization and bankruptcy proceedings, thanks to agreements it has reached with shareholders and noteholders. The company’s debts are somewhere between $100 million and $500 million while its annual revenue fell by nearly half a billion in the last three years. It owes money to at least 26 other companies and vendors.
The reorganization could lead Gibson, which also manufactures other well-known brands like Epiphone and Kramer, to focus squarely on its instruments business and hopefully inspire new generations to pick up guitars again.