Gibson files for bankruptcy, Henry Juszkiewicz loses ownership
Chapter 11 of the U.S. Bankruptcy Code has been started for Gibson
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At last, the painful waiting is over. Gibson Brands Inc. has (finally!) filed for Chapter 11 protection in Delaware, according to Bloomberg. The company’s creditors have, as widely predicted, forced a change in the company leadership. The consumer electronics part of the business responsible for the company’s woes will be sold. Meanwhile, the company wants to focus on its guitar business and return to profitability as a smaller, more nimble company, according to Bloomberg.
Chapter 11
It seems that former owner Henry Juszkiewicz will stay on as CEO for the time being, although ownership has been transferred to the company’s creditors.
The company has applied for Chapter 11 of the U.S. Bankruptcy Code which aims to protect the business from total financial collapse and help them to restructure, streamline and carry on using the name. We understand that the courts have allowed them to carry on using both the Gibson and Epiphone brands which will remain along with Cerwin Vega and KRK Systems, thus concentrating the US-based company and hopefully getting them back on track to becoming profitable once more.
Full court filings and other documents related to the court proceedings are available here
You can also see the form with all the details of here, signed by Henry Juszkiewicz today.
Gibson file for bankruptcy · Source: Primeclerk/Gibson
Henry’s dream
It is fairly obvious that Henry Juskiewicz has always wanted Gibson to be a global lifestyle brand, however, it would now appear that by overreaching in the electronics markets and diversifying the company portfolio that he has, in fact, weakened the brand instead.
Most people saw this coming and I hope that this Chapter 11 bankruptcy application will finally help the Gibson brand to get back in black and out of the red. We all know that a good quality Gibson guitar can be something very special indeed, so it would be fantastic to have those back again.
If you would like to read more of my Gibson articles then please click here.
UPDATE
Henry’s official statement below.
Gibson’s Henry Juszkiewicz statement · Source: Gibson
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5 responses to “Gibson files for bankruptcy, Henry Juszkiewicz loses ownership”
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My reading of the proposed bankruptcy agreement doesn’t limit Gibson to only operating those 4 brands per se but only allows operating funds to be allocated towards those 4 so if any of the other stuff (Kramer, Steinberger, etc.) can continue to operate without any help they might keep them, if not they’re going to be sold off. Of all the other “Gibson Brands” stuff, only Kramer and Steinberger in their present forms are “turn key, shove-them-out-the-door” items (low cost, made in China, no domestic overhead except warehousing). Everything else is either moribund legacy stuff or stuff not worth the effort to keep (Baldwin pianos etc.).
What is the disposition of Epiphone Brand? Will it remain with Dave Berryman at the helm?
No mention of Berryman in the bankruptcy filing that I could see. As I understand it, Berryman is/was has/had a minority stake in Gibson and is basically Henry’s buddy. The creditors have named a reorganization officer who will be answerable to them who will basically be calling the shots so where Berryman fits in is not a given. Generally when this sort of thing happens, the existing management often remains in place to facilitate the transition and are shown the door later so where Berryman ends up is ?
If the Chapter 11 goes thru as stated in the press release, Epiphone (being one of the 4 Gibson brands approved to receive financing) will probably continue more or less as it is at least until Gibson exits Chapter 11 reorganization. At this point it is slated to remain under the Gibson “umbrella”.
Latest from “Music Trades” (music industry magazine) for Elantric’s question: Dave Berryman (who runs Epiphone) will be retained for 1 year @ $3.35m salary to aid in transition.