The filing by the nation’s largest retailer of musical instruments highlights the growing gap between the strongest and weakest companies in the pandemic.
Guitar Center, the country’s largest retailer of musical instruments, filed for bankruptcy protection late Saturday night. The company, which was struggling to compete against online rivals even before the pandemic, was hit hard when it was forced to temporarily close most of its stores earlier this year. It entered Chapter 11 restructuring proceedings in the U.S. Bankruptcy Court of the Eastern District of Virginia. It will continue to pay its vendors and employees in full, it said in a news release. Guitar Center said it had struck an agreement with its creditors in support of a plan that would reduce its roughly $1.3 billion in debt by $800 million. To help support its bankruptcy, it said it had secured new financing from investors that include a fund managed by its current owner, the private equity firm Ares Management Corporation, as well as funds managed by the hedge fund Brigade Capital Management and the Carlyle Group, also a private equity firm. The company said it expected to emerge from bankruptcy by the end of the year. “This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth,” Guitar Center’s chief executive, Ron Japinga, said in a statement.
