While this year saw brands like Fender report record sales numbers, things aren’t going so well for the retailers. On Friday, Guitar Center announced it was planning to file for Chapter 11 bankruptcy, and a prepackaged plan could be approved as early as this weekend.
The move is part of the music instrument retailer’s plan to restructure its debt and will include up to $165 million in new equity investments from funds managed by its private equity owner Ares Management, along with the Carlyle Group and Brigade Capital Management, Bloomberg reports. By filing for Chapter 11 bankruptcy, Guitar Center would be able to continue operating its 300 stores during the restructuring process and be given a break on repaying debts. It also offers certain holders an opportunity to take equity in the restructured company.
“As a result of this financial restructuring process, we will be better equipped to execute on and invest in our strategic growth initiatives and we will continue delivering through the strength of our brands, availability of our stores, customer-focused associate relationships, innovative music education programs and our expanding digital solutions,” Ron Japinga, chief executive officer of Guitar Center, said in the statement.
This is just the latest blow to both the music and retail industry since the coronavirus pandemic hit in March; however, live music may be making its return sooner than we thought.