For any musicians reading this, you may be devastated to learn that the guitar company, Gibson, recently filed for bankruptcy. But don’t worry, all may not be lost; the leading guitar company plans to stay in business by focusing solely on manufacturing and selling guitars and other instruments, while gutting its consumer electronics line of products like speakers, headphones, and other accessories. Let’s take a look at what happened and their plan to stay in business:
Drowning in debt
According to paperwork that was filed on Tuesday, May 1, 2018 in Delaware, Gibson Brands, Inc. owes anywhere from $100 Million to $500 Million in debt. This mountain of debt may stem from their struggle to abide by regulations on the import and export of rosewood. Rosewood is commonly used in manufacturing guitars, and is sourced from Madagascar. Political turmoil a few years back in the island country sparked an illegal logging black market. As a result, many large guitar manufacturing companies have seen major setbacks akin to that of Gibson.
Planning for the future
Gibson’s professional audio and instrument business has always been stable, but the consumer electronics business has not always fared so well. Thus, the company, in order to stay afloat, plans to stick to its specialty in manufacturing musical instruments. The consumer electronics branch, however, will be severed to make the change easier. On the bankruptcy side of things, Gibson has filed for Chapter 11 bankruptcy, which reorganizes the business’s affairs and assets in order to pay down the debt.
It’s always worrisome when big companies with a successful track record file for bankruptcy. However, Gibson plans to stay in business and just shift its focus to the more profitable end of its business practices. For more information about bankruptcy, visit our website at http://levinelawoffice.com, or call the Law Office of Barry Levine at 978-922-8440.