Gibson Brands has made iconic guitars played by the likes of Elvis, B.B. King and Jimmy Page. On May 1st, Gibson filed for Chapter 11 bankruptcy in Delaware. Here’s a look at the details behind Gibson’s decision and what it could mean for the future of the company.
Gibson is Not Doomed to Fail
Contrary to popular belief, filing for Chapter 11 protection does not mean a company is on its way under. It is simply a way for companies to survive through rough patches when they’re struggling financially. Gibson currently has $500 million in debt. The company filing for bankruptcy was widely anticipated. Their decision to file also doesn’t mean that rock is dead, although other guitar companies, like Fender and Guitar Center, have been struggling, too.
“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,” said Gibson’s CEO of 3 decades, Henry Juszkiewicz, in a statement to the Rolling Stone.
Gibson’s Future Plans
Part of Gibson’s plan is to liquidate its consumer electronics business. That part of the business sells headphones, speakers and accessories. The consumer electronics unit operates largely outside the U.S. and has been the source of their financial burden. Their business of musical instruments and professional audio equipment has been much more stable over the years, so that is the side of the business they will focus on going forward. I think it is great to see the business returning to their roots, focusing on crafting guitars and other equipment for musicians around the world.
Gibson was founded in 1902 by Orville Gibson. Their headquarters has been based in Nashville since 1984. According to court documents, the company currently employs just under 900 people. They sell over 170,000 guitars annually in 80 countries. The guitars are all made in the U.S., specifically Nashville and Memphis in Tennessee and Bozeman in Montana. The most popular guitar is Gibson’s SG Standard, which replaced the Les Paul model in 1961. Gibson also owns Baldwin pianos and Wurlitzer, known for pianos, organs and jukeboxes.
Gibson’s decision to file for bankruptcy is one that will allow the business to reorganize. By cutting ties with their “non-core brands,” they can concentrate on their original mission – selling quality musical instruments. Those of us who appreciate the craftsmanship of Gibson’s guitars should be excited that future generations will be able to experience the guitars’ unrivaled sound and design.