Gibson Brands Files for Bankruptcy — Owners of TASCAM, KRK, and Stanton

After a long and highly public string of business troubles, Gibson Brands has filed for bankruptcy.

It’s not the end of the line for Gibson, however. The move is the first step in a turnaround plan that will see equity ownership going over to some of the company’s lenders, with support from senior secured noteholders helping the troubled manufacture that’s best known for its guitars — but with several pro audio and consumer-electronics holdings also under its umbrella.

That support will assist Gibson in repaying bank loans while it goes through a “change of control” transaction, this according to a filing on Tuesday with its Chapter 11 bankruptcy in Delaware. Their petition demonstrates a lot of debt to clean up: Gibson owes as much as $500 million. Its lenders will now provide a new loan of up to $135 million to keep the pickups humming.

Gibson’s bankruptcy is about more than just guitars.

Following this change in control, noteholders will have equity in a new company that will replace current stockholders like its Chief Executive Officer, Henry Juszkiewicz. Current noteholders include Silver Point Capital, Melody Capital Partners and funds affiliated with KKR Credit Advisors,according to the court filings.

The hopes are that this restructuring will also decouple Gibson’s famed instrument business from bad bets on consumer electronics that Gibson – and many others – blame for its current financial situation. These wagers include Gibson’s acquisition of Philips’ audio and home entertainment business for $135 million, plus a line of consumer electronics from Onkyo, all part of a rebranding of Gibson Guitars into “music lifestyle” concern Gibson Brands.

The diversification fell short, however, leaving the company bereft of cash while earnings tanked. Time for a turnaround ran short, with a bond maturity and springing term loan coming due this July.

Pro Audio Implications

While the mainstream media’s hubris will focus on the downfall of an iconic music company, founded in 1894 and putting guitars in the hands of countless superstars, there is some Pro audio fallout as well.

Gibson’s questionable management decisions already led to the outright destruction of Cakewalk – the software developer and its SONAR DAW was officially shut down in November of 2017, four years after Gibson had acquired it. Now employees of TASCAM (acquired along with TEAC in 2013) monitor maker KRK, and DJ tools creator Stanton (all acquired in bulk along with Cerwin Vega in 2011) must be wondering what’s next for them and their users.

How will Gibson-owned pro audio players like TASCAM be affected?

Once a mighty name in the studio world, TASCAM has maintained a consistent, albeit much smaller, presence in recent years. KRK has sought for some time to restore the luster and credibility of its glory days. Meanwhile, Stanton seems to have held its own among DJs while under the Gibson corporate umbrella.

Owners of solutions from all these audio gear makers should see their service and support continue for the time being. But it’s fair to wonder: How much of a priority will any of them be to a new bunch of bosses who see nothing but six-strings in the stumbling giant?

• David Weiss

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