Easily one of the most influential instrument-makers in the world, after 100 years in business Gibson have filed for bankruptcy.
American guitar-makers founded in 1902 Gibson have filed for bankruptcy this week following a series of asset sales and restructuring. The court filing says that Gibson have been “trapped in a vicious cycle in which it lacked the liquidity to buy inventory and drive sales”.
On Tuesday Gibson filed for chapter 11 bankruptcy in hopes to resolve their recent financial issues by “re-focusing, reorganising, and restructuring”. Gibson have been slowly skimming off their side-businesses and purchases to streamline their cash flow after a series of bad financial decisions put the company in trouble.
Gibson CEO, Henry Juszkiewicz said: “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.” Sales include their dead music software Cakewalk which Bandlab plan to resurrect following their purchase of the entity.
Gibson plan to be less ambitious in their ventures beyond their guitar-selling staple, saying that their attempts to become manufacturers of all sorts of audio equipment will “be wound down”. This follows Gibson’s purchase of Woox Innovations in 2014, an audio, video, multimedia, and accessories business from electronics giant Philips, which Gibson have since sold.
Moving forward with their bankruptcy Gibson hope to be able to refocus their company on what made them popular – making world-class guitars. They’re adamant this won’t affect Gibson guitar owners, saying: “Rest assured, there will be no changes to our warranty and return policies and we are still making, selling and shipping the world’s most iconic guitars. Our relationship with you is important to us and we’re excited for what the future holds.”
Gibson filed yesterday to reorganize under Chapter 11 of the U.S. Bankruptcy code. This does NOT mean Gibson is going out of business. It means it is reorganizing its business to focus on guitars and musical instruments and becoming a stronger company in the process.
— Gibson (@gibsonguitar) May 2, 2018
With a more aligned business plan hopefully Gibson can get back on track as their core guitar business is actually still booming. Gibson sell more than 170,000 guitars every year across over 80 countries. They even told in January that electric guitar sales had jumped up by 10% to $122 million in the 12 months prior. They plan to exit bankruptcy protection on the 24th September.