The company tried to survive during the COVID-19 pandemic by offering virtual music lessons. However, Guitar Center was hit by store closures and online competition.
Guitar Center joins the growing list of retailers slammed by the coronavirus pandemic. J. Crew, Neiman Marcus, Century 21, Lord & Taylor, and JCPenney also filed for bankruptcy in recent months. However, Neiman Marcus has already emerged from bankruptcy protection.
Why Guitar Center filed for bankruptcy
On Nov. 21, Guitar Center filed for voluntary Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court of the Eastern District of Virginia. The company’s operations were hit hard after the COVID-19 pandemic forced temporary store closures in most of the U.S. Guitar Center closed nearly 75 percent of its stores in March during nationwide lockdowns. The company was also struggling to compete with the increased demand for online shopping.
According to Guitar Center’s bankruptcy filing, the company said that it has secured $165 million in new equity investments. The company plans to decrease its debt by nearly $800 million. Guitar Center's primary owner, Ares Management Corporation, as well as funds managed by the hedge fund Brigade Capital Management and the private equity firm The Carlyle Group, will help finance the company through bankruptcy.
Guitar Center CEO Ron Japinga said, “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 is a music retailer chain. It was founded in 1959 by Wayne Mitchell. It's the biggest company of its kind in the U.S. with 269 locations.
Is Guitar Center selling its properties amid bankruptcy?
The bankruptcy release didn't mention any potential sale of properties that Guitar Center might undertake. However, the company mentioned that it would operate its storefronts as normal and continue to pay its employees during the bankruptcy period.
Ron Japinga said, “Throughout this process, we will continue to serve our customers and deliver on our mission of putting more music in the world. Given the strong level of support from our lenders and creditors, we expect to complete the process before the end of this year.”
Is Guitar Center publicly traded?
No, Guitar Center isn’t a publicly-traded company. It's a privately held company and there isn't an established public trading market for its stock.