After more than 116 years in business, guitar giants Gibson have filed for bankruptcy. The files submitted on Tuesday have stated that the company has at least $100 million in debt. Gibson have taken the step in an attempt to rejuvenate the company. However, the move has shocked the music community, as no one would have expected that such an illustrious company could have such major monetary problems.
History of Gibson Guitars
Orville Gibson founded his guitar company as Gibson-Mandolin Guitar Mfg. Co. Ltd back in 1902. Originally, he began by making mandolin style instruments and by the 1930s the company had started selling acoustic guitars. In the 1950s the Les Paul was created which is still, the most iconic guitar in the world. Garrison Guitars took over the company in 2007, and only seven years ago they were renamed to Gibson Brands Inc.
Famous Gibson Players
The list of famous Gibson players is endless however some players are famed more than others. Slash, of Guns ‘n’ Roses, is the first famous player to mention. Along with his outstanding top hat, Slash always carries a Gibson on stage, most notably a Les Paul. Slash is probably best known for his 1959 replica built by Kris Derrig, which his manager bought for him in the 1980s. Slash used this iconic guitar in the recording of Appetite For Destruction and still has it in his collection to date.
Keith Richards of the Rolling Stones has played his famous Les Paul guitar for years. In fact, Richards became the first British ‘star-owner’ of the Les Paul in 1959. Throughout the 60s and 70s, Richards continued to use several Les Paul and ES models in many of his music videos, therefore, he has become a very well known Gibson player.
Another famous player is Jimmy Page of Led Zeppelin. Like Richards, Page has owned several guitars and currently uses a 1959 “number 1”, which he once described as his “mistress and wife”. Jimmy Page most famously used a double-necked EDS-1275 in Led Zepplin’s live performances of Stairway to Heaven and The Rain Song.
News emerged in February this year that the guitar manufacturer has financial difficulties. Their bankruptcy, however, has only come to light at the beginning of this month. According to CEO Henry Juszkiewicz, the company have decided to “re-focus on core business and instruments”. He added that his main concern was “the long-term stability and financial health” of the company.
Gibson’s financial instability is due to a culmination of several problems. Firstly their Chief Financial Officer Bill Lawrence quit after less than a year in the post. Then $375 million of senior secured notes surfaced and, also, the company now owe $145 million in bank loans.
Gibson’s bankruptcy, according to many in the music industry, is partially due to the demand for guitars decreasing. Eric Clapton has said recently that “the guitar is over” and it is clear to see that the market for guitars has fallen since the early 2000s; encouraging the resale of guitars. This means that Gibson, are missing out on much-needed revenue.
What does the future hold?
Gibson hopes that they will undergo a restructuring process to return profitability to the company. Gibson have already begun offering redundancy to some staff to cut costs. Their aim for the near future is to reduce debts and generate funds to pay off their bank loans and senior secured notes. Gibson Brands Inc are hopeful they will retain their status as the guitar manufacturing heavyweights, by efficiently managing their debts. Most musicians seem positive that Gibson will re-emerge unscathed from this recent scandal.
Morningside School of Music director, Paul Boyd stated:
“Both the clients and staff of Morningside School of Music, are positive that Gibson Guitars Inc will overcome this significant glitch in their trading history and continue to be one of the leading international musical instrument brands.”
Written by Luke Shearer on Saturday the 6th of May, 2018.