Gibson’s plans for Chapter 11 exit get a green light
Lenders, including KKR & Co, will lead the guitar giant out of bankruptcy.
An amended plan of reorganization Gibson recently filed to the Delaware Bankruptcy Court has been formally approved. This means the guitar icon is, as of October 2, on its way out of bankruptcy.
Under the guidance of KKR and other lenders, the reorganized company could resurface as early as November. The plan, according to Billboard, will see Gibson “wipe its $500 million of debt and use as much as $70 million to galvanize its business plan for growth.” Nat Zilkha, KKR’s head of alternative credit, and a musician himself, will sit on Gibson’s board.
“I feel like I have a personal relationship with the product,” Zilkha told Bloomberg in an interview. “This is a great a American brand that sort of lost its way. It’s almost like a responsibility to try to bring it back to what its supposed to be.”
In May this year, Gibson filed for Chapter 11 bankruptcy. This was largely attributed to its failed rebranding of Koninklijke Philips NV, which CEO Henry Juszkiewicz acquired in 2014. “My dream was to be the Nike of music lifestyle,” he said. Unfortunately, that dream was never realized.
The new plan of reorganization will see Juskiewicz and co-owner Dave Berryman step down from their roles. This also entails the cancelation of their equity stakes. According to Bloomberg, the pair will receive “a consulting agreement that bars them from making negative comments about Gibson for three years.”
At the time of writing, a new CEO has yet to be formally named. Gibson, however, has already shifted its efforts back to delivering stellar musical instruments, as evidenced by their sprawling 2019 line-up.
The future of the rock icon now lies with KKR and its other lenders. Zilkha, for one, has made his intentions clear. “For us, establishing the credibility that we intend to deliver is important,” he said. “We are musicians. We care deeply about the brand and we are going to protect it.”