Guitar Center has filed for Chapter 11 bankruptcy, the latest retail chain to succumb to the coronavirus pandemic and a significant drop in consumer demand for discretionary goods and services.
The retailer announcement he had filed for Chapter 11 bankruptcy protection “to significantly reduce our debt and improve our ability to reinvest in our business.” Guitar Center aims to emerge from bankruptcy before the end of the year, the company said.
In its filing, Guitar Center said its lenders have already agreed to reduce the company’s debt by nearly $800 million and it has also secured up to $165 million in new equity investments.
Like other retailers, the 61-year-old company was forced to close many of its stores in March during nationwide shutdowns, struggling to get customers to buy instruments even after the shutdowns ended. Guitar Center has 269 locations, many of which are in malls.
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Malls themselves have struggled during the pandemic as retailers have been forced to shut down their brick-and-mortar operations, setting off an economic chain reaction that has hit mall owners’ bottom lines.
Shopping center operator CBL & Associates Properties (CBL) – Get the report earlier this month filed for Chapter 11 bankruptcy protectionbecoming the latest shopping center operator seeking to restructure its operations.
While Guitar Center had turned to offering virtual music lessons to make up for declining sales, that wasn’t enough to stop it from filing for bankruptcy.
The company’s principal owner, Ares Management, along with new equity investor Brigade Capital Management and a fund managed by Carlyle Group will help finance Guitar Center during the bankruptcy, the company said.
Guitar Center will continue to operate during its bankruptcy proceedings. He hopes to complete the process by the end of the year.
More than a quarter of Americans – 28% – say they will spend less on holiday gifts this year compared to last year, according to a recent Gallup poll, marking the highest percentage recorded by Gallup in the category since 2012.