NEWS : Guitar Center Files for Chapter 11, Ironically as Sales of Guitars Soar
Guitar Center Files for Chapter 11 Bankruptcy Protection
As Sales of Fender, Taylor, Gibson Guitars Boom
The Filing Comes One Week After a Massive Debt-Restructuring Agreement
A week ago, Guitar Center announced a debt restructuring agreement which is planned to slash $1.3 billion debt by nearly $800 million. The Chapter 11 filing indicates that the company seeks to obtain $375 million in Debtor-In-Possession financing from existing note holders and lenders, and an additional $335 million in new secured loans.
The company says it will continue operating as normal (as normal as it was in 2020 — with a majority of its 300 stores having been temporarily closed early on in the pandemic). It has faced tough competition from online retailers. Guitar Center says it will remerge from Chapter 11 before the end of 2021, but a long-term successful restructure must address its deficiencies in the digital arena.