Gibson Brands, the iconic Nashville-based guitar-maker, is on the brink of bankruptcy, with creditors and bondholders fretting over the future of the company and CEO Henry Juszkiewicz likely on his way out, according to a report by the Nashville Post.
With its instantly recognizable guitars and storied role in the history of blues, country and rock music, Gibson remains a solid brand, with annual revenues reportedly topping $1 billion. But the Post reports that behind the scenes, the company has been badly damaged by poor decision-making and “operational problem[s]”. CFO Bill Lawrence parted ways with the company in 2017 after less than a year on the job, and several critical loan deadlines are looming. Gibson recently received a “lifeline” infusion of capital from GSO Capital Partners, and has brought on an investment bank to aid a refinancing effort. The Post quotes a senior credit officer at Moody’s Investors Service who says Juszkiewicz must find a way either to refinance the debt or go to bankruptcy court, saying the company is “running out of time—rapidly.”
A request for comment was not immediately returned.
Juszkiewicz, who saved Gibson from insolvency when he bought the company along with David Berryman in 1986, has attempted to expand its reach on the electronics market in recent years. In 2011, Gibson acquired the Stanton Group, owner of several audio-equipment manufacturers, and launched Gibson Pro Audio for sales of audio items like speakers, headphones and DJ equipment. In the following years, Gibson acquired several more audio-equipment and electronics firms. Sales didn’t exactly explode, and customers were especially displeased when popular DJing equipment and audio software programs were subsequently discontinued.
Gibson was also left reeling in 2012 when it admitted to violating the Lacey Act and paid substantial fines after federal agents discovered illegally imported wood during raids of company factories. The dearly departed Gawker also reported this gem of a story about Juszkiewicz back in 2014.
The company has recently been trying to offload some of its real-estate holdings in Nashville, but even if those sales come to fruition, they’re unlikely to stanch the bleeding. Gibson was founded in 1902 by Orville Gibson in Kalamazoo, Mich. It remained in Kalamazoo until 1984, when primary production was moved to Nashville.