Music retail giant Guitar Center is the latest company to file bankruptcy during the COVID-19 pandemic that has ravaged the U.S. / world economy.
Chapter 11 bankruptcy is now the reality for 61-year-old company Guitar Center. The chain, which is the largest music retailer in the United States, has tried several avenues to stay afloat since the first COVID-19 shutdowns in March. These attempts, however, such as virtual sales, deals, and music lessons, were not enough to save the music giant.
Guitar Center is one of the many household-name retailers closing doors this year since shutdowns began this March. From there, open stores were unable to sell their stock – which comprises mostly of large, expensive instruments – to customers in a crumbling economy with millions out of work.
Nearly 300 locations in the U.S. will be impacted by the bankruptcy. In the filing, Guitar Center says it “received up to $165 million in new equity investments and lenders agreed to reduce the company’s debt by nearly $800 million.”
Guitar Center Owner To Guide Company Through Bankruptcy
According to CNN, the company’s primary owner – Ares Management Corporation – will guide Guitar Center through bankruptcy. “New equity investor Brigade Capital Management”. Furthermore, a fund by The Carlyle Group will help finance Guitar Center through bankruptcy, as well.
“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,” Guitar Center’s CEO says in a statement. The CEO, Ron Japinga, adds that their company “will continue to serve our customers and deliver on our mission of putting more music in the world.”
CNN also states that “the company will continue to stay in business during the bankruptcy process. But it may not be able to capitalize on the holiday shopping boom. More than a quarter of Americans — 28% — say they will spend less on holiday gifts this year. Gallup said in a new poll, marking the highest percentage Gallup has recorded in this category since 2012.”
Japinga, however, is hopeful that Guitar Center will complete the bankruptcy process by the end of the year. As such, they may survive this pandemic, after all.