Gibson files for Bankruptcy

[Lynch]

https://www.premierguitar.com/articles/27275-gibson-files-for-bankruptcy



Nashville, TN (May 1, 2018) -- Gibson Brands Inc. has apparently taken the first major step in returning to its core business of guitar building by filing for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Delaware, seeking protection from lenders and a transfer of the corporation’s control while restructuring its holdings and operations.

Since 2010, Gibson, under the leadership of CEO Henry Juszkiewicz, changed its name from Gibson Guitar Corporation and pursued a strategy of also becoming a broad-based consumer electronics company. In that pursuit, Gibson acquired the Stanton Group—which includes KRK Systems, Cerwin-Vega, and Stanton DJ—as well as a majority stake in TEAC. In addition, it acquired consumer electronics firm Royal Philips, and established a partnership with audio and home theater company Onkyo. That strategy has been blamed for the $500 million debt Gibson has accumulated. The company also invested heavily in high-profile guitar products that failed to appeal to players, including so-called “robot” tuning systems and the Firebird X model, which insiders say were spearheaded into production by Juszkiewicz.

According to a Fortune report based on court documents, Gibson will repay bank loans while under the control of its prominent bondholders, who will replace current stockholders such as Juszkiewicz in the driver’s seat. Juszkiewicz is expected to remain with Gibson until it emerges from bankruptcy in order to assure a smooth transition. The group of bondholders taking the company’s reins will engineer a new loan of up to $135 million to keep Gibson operating.

In recent months, Gibson has reduced the workforce at its Custom Shop guitar business and put its spacious Memphis showroom and factory—where most ES models and other semi-hollow and hollowbody models are made—on the market, vowing to relocate in a smaller building. As part of its musical instrument business, Gibson also owns the Epiphone, Kramer, Steinberger, Dobro, and Baldwin brands. According to a report on the bankruptcy filing in The New York Times, Gibson’s electric guitar sales in 2017 were 10.5 percent higher than in 2016, reaching $122 million.

 

[Lynch]

Saw something online where a couple of people were blaming Obama and his government mafia for this current situation.

Before you laugh or scoff, the reason that I saw might have been semi-believable.

Supposedly they were targeted by the IRS, FBI and other government agencies a couple of years back because the CEO donates money to republican politicians. I guess at least some of this debt was the cost of defending themselves against the witchhunt. Seeing the shady shit that happened with our government with spying on non-criminals based on political leanings back in 2016, I'm less skeptical that this could be real.


Interesting and pretty sad if it is true.

 

[Lynch]

Just found this, regarding the 2nd of two raids on the Gibson Guitar factory back in 2011:

On August 2nd, 2011, armed federal agents from The US Fish and Wildlife Service raided Gibson Guitar Corp. in Nashville Tennessee. They stormed-in like a swat team, frightening workers, shutting down production, and confiscating computers, raw materials, documents. This was the second time Gibson had been raided since Obama took office, the first having occurred in 2009. At the time, the reasons given had to do with some alleged violation of an obscure statute having to do with foreign laws and exotic wood. This made no sense. Other guitar makers were using the exact same wood, but they weren’t raided. Why Gibson?

Some suggested Gibson was targeted because CEO and owner, Henry Juskiewicz, gave donations to Republicans while Martin Guitars, Gibsons rival in the acoustic guitar market, donated to Democrats. This suggestion has re-emerged in the wake of the IRS scandal, but this also makes no sense. Lots of CEOs give to Republicans and don’t get raided by armed federal swat teams.

No, Gibson, like J&J and Toyota, symbolized an existential threat to Obama’s union agenda: Gibson had relocated from a forced-union state to a right-to-work state.

Gibson was founded in Kalamazoo, Michigan, right smack in-between union strongholds Chicago and Detroit. But, Gibson moved production to Tennessee in the 80’s, fleeing a forced-union state for a right-to-work state. This is a cardinal sin for Obama and the unions. Obama has called the right-to-work “the right to work for less money” (12). Unions hate right-to-work laws because it makes future unionization less likely and less lucrative for them.

Side bar: Gibson’s two major competitors in the domestic-made guitar market, Martin and Fender, both manufacture primarily in forced-union blue states, Pennsylvania and California respectively. Fender Musical Instruments, Gibson’s rival in the electric guitar market has historical ties to media giant CBS, which owned the company until the mid ‘80s. (Meanwhile, Michigan became a right-to-work state in 2012, and the conversion did not please Obama or the unions .)

JFC. If this is real ...