Guitar Center, the nation’s largest retailer of musical instruments, has filed for Chapter 11 bankruptcy protection, the company announced November 21st.
The bankruptcy filing came just one week after the Guitar Center, which had been struggling to compete with online retailers even before the pandemic, announced it had reached a debt-reduction deal with its key stakeholders.
The approved restructuring support agreement (RSA) intends to reduce Guitar Center’s reported $1.3 billion debt by nearly $800 million, including $375 million in Debtor-In-Possession financing from some existing note holders and lenders. It also intends to raise $335 million in new senior secured notes…
…The company says its business operations will continue uninterrupted during the debt restructuring process and that it will continue to pay its vendors, suppliers and employees; operate its stores, websites, call centers and social media pages; and receive goods and ship orders. It will additionally honor all merchandise credits, prepaid lessons, rentals, gift cards, deposits, orders, financing and warranties.
“This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth,” said Guitar Center CEO Ron Japinga in a release. “Throughout this process, we will continue to serve our customers and deliver on our mission of putting more music in the world.”
Japinga added that the company expects to emerge from bankruptcy by the end of this year.
Guitar Center currently has 300 stores as well as 200 Music & Arts stores, which sell band and orchestral instruments, in the U.S. A majority of those locations were forced to close temporarily early in the pandemic, only adding to the company’s woes.
Saturday’s bankruptcy filing ironically comes as guitar sales surge in the U.S., driven by consumers wanting to pick up new hobbies during the pandemic shutdown…
…The rise of online competitors such as e-tail giant Sweetwater, along with an overall decline in sales of its namesake product, coincided with Guitar Center’s 2007 leveraged buyout by private equity firm Bain Capital, which left the company with over $1 billion in debt that it has since struggled to pay off.
Read more at Billboard.
Sad news……hope they can turn it around.
Just another example of brick and mortar stores succumbing to on line competitors. Unfortunately, its the way retail has been trending for a while, but the pandemic has accelerated it.
Glad to learn about a surge in guitar sales cuz I thought the trend was the opposite. Perhaps with this surge we can get music performed by real musicians rather than people making so called “music” via computer technology.
I bought my first Jackson guitar in the mid 80’s from the Guitar Center in Hollywood.
There goes the last music store near me. The older non-chain/Independent stores closed up years ago. Online options are great, but it’s also nice to try a guitar/Amp before buying.
Completely agree. U can play the same make of guitars/amps and they will sound different.
When your a national retail chain like guitar center, your operating costs are extremely high , and they want to make a good size profit after paying overhead, so prices are always going to be higher than online competition , the pandemic needless shutdown hurt thousands of business’s and families, and put many out of business , its complicated , but truthfully people are always going to want to save a buck especially young musicians, used music stores in my town are booming , guitar center wil have to lower their prices and overhead significantly if they want to compete with online retailers –
They should have eased up on the No Stairway to Heaven rule.
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