Gibson Files for Bankruptcy: The iconic American guitar and music company Gibson Brands Inc. (private) filed for Chapter 11 bankruptcy at a US Bankruptcy Court, on Tuesday.

The company has entered into a “Restructuring Support Agreement” with holders and hopes this will reorganize Gibson’s core business.

According to a recent article from Bloomberg Gibson filed for bankruptcy in a Delaware court on Tuesday and owes approximately USD $500 million in debt.

The company was also affected negatively by import restrictions on rosewood, which is one of the main materials for several of Gibson’s high-end guitars and instruments.

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The Chapter 11 proceedings will allow the company to continue manufacturing its products while the restructuring is in progress.

The Nashville-based company supplies approximately 170,000 guitars annually to over 80 countries, including iconic brands such as Les Paul and SG, according to Reuters.

Gibson is also receiving a $135 million loan which will help to keep the business running, and hope to come out of the Chapter 11 proceedings with less debt, working capital financing and a stronger platform that is focused on musical instruments.

Gibson Innovations, based mainly outside of the US, was purchased in order to facilitate a relaunching of Gibson from a guitar company to a “music lifestyle” company, according to Bloomberg.

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The business has recently been facing a decline in sales and will be wound down, as a result of the bankruptcy filings.

Chairman and CEO of Gibson, Henry Juszkiewicz, has said “the decision to re-focus on [the company’s] core business, Musical Instruments, combined with the significant support from [Gibson’s] noteholders…will assure the company’s long-term stability and financial health.”

Juszkiewicz, who acquired Gibson in 1986 and has served as its CEO since 1992, and Gibson’s President David Berryman will remain with the company.

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