Legendary Guitar Brand Gibson Officially Files for Bankruptcy

Gibson Guitar CEO Henry Juszkiewicz speaks at the plant in Nashville Tenn

Gibson was founded in Kalamazoo, MI, in 1902.

The company issued an official statement this morning regarding its decision to enter bankruptcy protection.

With the noteholder agreement, the company has "an exit path from Chapter 11 as a deleveraged business, poised for continued growth", Fox said in the filing.

While it expects to continue operations, the company said it will wind down its Gibson's Innovation business, most of which is outside the United States.

Among the more memorable in recent history are Angus Young of Australian rock band AC/DC, who plays a white Gibson SG guitar, echoed in the 2003 film School of Rock in which Jack Black also touts a Gibson SG.

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The company has already sold off some noncore brands, acquisitions that contributed to its burdensome debt load. The Washington Post highlighted the ultimately failed concept in a burning piece called "The Death Of The Electric Guitar". The unit will be wound down, according to a Gibson news release.

Estimates of the petition say that the company is up to $500 million in debt, and the lenders have agreed to an operating, or "debtor in possession", loan of up to $135 million to fund operations. It sells more than 170,000 guitars a year in more than 80 countries, including more than 40 percent of all electric guitars that cost more than $2,000, according to a bankruptcy filing. That includes its Nashville and Memphis factories, as well as a factory in Bozeman, Mont. Gibson had also developed a broken relationship with some retailers, a number of whom have stopped selling the brand, citing unmanageable demands that range from annual credit checks to upfront orders for a year's merchandise.

Before the filing, Gibson reached an arrangement with major constituents to its musical instruments business, but not the consumer electronics business, Fox said.

Despite an overall decline in guitar sales, the company remains one of the top two guitar brands in the entire world. Gibson has begun the liquidation process for its debt-plagued, struggling global Gibson Innovations division, which sells headphones, speakers, accessories and other electronics.

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