Guitar Center files for bankruptcy court protection
Guitar Center has filed for Chapter 11 bankruptcy protection, becoming the latest nonessential retailer to fall victim to the pandemic.
Bloomberg’s Katherine Doherty reported:
Guitar Center Inc., the largest U.S. retailer of music instruments and equipment, filed for bankruptcy after the coronavirus pandemic kept customers at home and job losses made them less able to afford new gear.
The filing in the Eastern District of Virginia gives the company a break on its debts by letting it stay in business as it seeks to carry out a restructuring plan. A turnaround will be complicated by the fact that the company’s stores were shut in mid-March to help stop the spread of the Covid-19 outbreak. It has reopened locations while maintaining e-commerce operations.
Alexis Benveniste from CNN wrote:
Guitar Center has 269 locations, many of which are in malls that had been struggling long before Covid-19. Foot traffic in malls has plummeted, and stores like Guitar Center that are dependent on people making discretionary purchases have been among the worst-hit this year.
The company said in its bankruptcy filing that it received up to $165 million in new equity investments and lenders agreed to reduce the company’s debt by nearly $800 million.
The company’s primary owner, Ares Management Corporation, as well as new equity investor Brigade Capital Management and a fund managed by The Carlyle Group will help finance Guitar Center through bankruptcy.