[ad_1]
Guitar Center Inc., America’s largest retailer of musical instruments and equipment, filed for bankruptcy after the spread of the coronavirus pandemic held customers home and job losses made them less able to afford new equipment.
The filing in the Eastern District of Virginia gives the company a break from its debts by allowing it to stay in business as it seeks to implement a restructuring plan. A turnaround will be complicated by the fact that the company’s stores were closed in mid-March to help stop the spread of the Covid-19 epidemic. It reopened some locations while maintaining e-commerce operations.
An agreement to support the restructuring that Guitar Center on November 13 announced calls for new financing backed by existing creditors as well as $ 165 million in new equity investments from its private equity owner, Ares Management Corp., and Carlyle Group and Management of the brigade’s capital.
Guitar Center, based in Westlake Village, Calif., Has approximately 300 stores across the United States. Sister brands include Music & Arts, with more than 200 stores specializing in the sale and rental of orchestral and orchestral instruments.
The coronavirus shutdown has hit non-essential retailers hard, and Guitar Center is vulnerable as musical instrument purchases are highly discretionary, according to a report by Moody’s Investors Service. The pandemic has cost tens of millions of Americans their jobs, and many of those still employed have seen their wages drop dramatically.
Guitar Center said its liabilities were between $ 1 billion and $ 10 billion, with a similar range for its assets, according to the filing.
Department stores and specialty stores were already under pressure before the pandemic due to competition from online giants like Amazon.com and lower traffic in shopping malls. Guitar Center branched out into offering repairs and music lessons, which continued online until shutdown via video conferencing services.
Ares took control of the company in 2014 through an out-of-court restructuring of Guitar Center loans. Its heavy indebtedness and financial pressures date back to a 2007 agreement by Bain Capital LP to take it private for $ 2.1 billion.
The case is Guitar Center, 20-34656, US Bankruptcy Court, Eastern District of Virginia.
– With the help of Rick Green and Max Zimmerman
[ad_2]
Source link