Gibson reaches agreement with noteholders, makes Chapter 11 filing

New York, May 1 – Gibson Brands Inc. made a pre-packaged Chapter 11 filing in the U.S. Bankruptcy Court for the District of Delaware on Tuesday after reaching an agreement with holders of 69.0% of its 8 7/8% senior secured notes due 2018, according to a news release and court documents.

The company said that it has signed a restructuring support agreement with the noteholders and its principal shareholders.

Under the proposed restructuring, Gibson will reorganize around its “core businesses” of musical instruments and professional audio products.

The Gibson Innovations business will be wound down.

Henry Juszkiewicz will remain as chairman and chief executive officer and David Berryman will continue as president.

“Over the past 12 months, we have made substantial strides through an operational restructuring,” said Juszkiewicz in the news release. “We have sold non-core brands, increased earnings, and reduced working capital demands. The decision to re-focus on our core business, musical instruments, combined with the significant support from our noteholders, we believe will assure the company’s long-term stability and financial health.”

Gibson has a commitment for $135 million of debtor-in-possession financing from the noteholders.

Funding from the DIP facility along with cash generated from operations will provide the company with the liquidity necessary to maintain its operations during the reorganization.

Gibson said it had $100 million to $500 million of both assets and liabilities.

The only unsecured creditor with a claim of more than $1 million is Evervictory Electronic BVI with a $2.85 million claim.

Juszkiewicz owns 36% of the equity interests in the company and Berryman LP owns 49%.

The Chapter 11 case number is 18-11025.

Alvarez and Marsal is acting as chief restructuring officer. Jefferies LLC is financial adviser, and Goodwin is legal counsel.

In March the company negotiated with KKR Credit Advisors (US) LLC about a potential debt-to-equity transaction, but no deal was reached.

Gibson Brands is a Nashville-based maker of musical instruments and consumer and professional audio.

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