The 61-year-old company – the largest retailer of musical instruments in the United States – had tried to stay afloat during the coronavirus pandemic by offering virtual music lessons. But Guitar Center was forced to close many of its stores in March during nationwide lockdowns, and it struggled to convince customers to buy instruments as the economy headed south.
Guitar Center has 269 locations, many of which are in distressed shopping malls long before Covid-19. Foot traffic in malls has plummeted, and stores like Guitar Center, which depend on people making discretionary purchases, have been among the hardest hit this year.
The company said in its bankruptcy filing that it received up to $ 165 million in new equity investments and lenders agreed to reduce the company’s debt by nearly $ 800 million.
The company’s primary owner, Ares Management Corporation, along with new equity investor Brigade Capital Management and a fund managed by The Carlyle Group will help fund Guitar Center in the event of bankruptcy.
The company will continue to stay in business during the bankruptcy process. But he may not be able to take advantage of the holiday shopping boom. More than a quarter of Americans – 28% – say they will spend less on holiday gifts this year compared to last year, Gallup said in a new poll, marking the highest percentage Gallup has recorded in this category since 2012.
“We will continue to serve our customers and fulfill our mission of bringing more music to the world,” Japinga said. He added that the company plans to complete the process by the end of the year.