Guitar Center Bankruptcy cases

The deal further includes $ 165 million in new equity investments from a fund managed by the private equity group of Guitar Center’s majority owner, Ares Management Corporation (which acquired a controlling stake in the company in 2014. ), new investor Brigade Capital Management, a fund managed by The Carlyle Group and other lenders.

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 also honor all merchandise credits, prepaid courses, rentals, gift cards, deposits, orders, financing and guarantees.

“This is an important and positive step in our process to significantly reduce our debt and improve our ability to reinvest in our business to support long-term growth,” said the CEO of Guitar Center. Ron Japinga in a press release. “Throughout this process, we will continue to serve our customers and fulfill our mission to bring more music to the world. ”

Japinga added that the company expects to come out of Chapter 13 bankruptcy by the end of this year.

Guitar Center currently has 300 stores as well as 200 music and art stores, which sell orchestral and orchestral instruments, in the United States.

Saturday’s bankruptcy filing ironically comes as guitar sales surge in the United States, driven by consumers eager to indulge in new hobbies during the pandemic shutdown. Fender Guitarist says CNBC that the company’s sales will hit $ 700 million this year, an increase of almost 17% from 2019, while competitors such as Gibson and Taylor have noted similar surges. Guitar Center itself reports that sales of Fender and other major guitar brands have seen triple-digit growth on its website since the start of the pandemic, although it’s not clear what percentage of those sales online came from new customers versus existing customers who would normally shop at one of the retailer’s physical locations.

The rise of online competitors such as online retail giant Sweetwater, as well as an overall decline in sales of its namesake product, coincided with the 2007 leveraged buyout of Guitar Center by the capital firm. Bain Capital investment, which left the company with more than $ 1 billion in debt that it has since struggled to pay.

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