Gibson Guitar Filed Bankruptcy
Bankruptcy isn’t the end, but a new start. Lots of people, and even famous businesses, use it to become lean and mean. This week, we get news that Gibson Guitar filed bankruptcy with Chapter 11. Gibson Guitar is not going out of business, and will keep making its famous guitars, Baldwin pianos, and other instruments. That’s the thing about Chapter 11 bankruptcy. Like Chapter 13 bankruptcy, it doesn’t necessarily end a business. In fact, the business income is used to repay creditors and save the business.
Gibson Guitar became famous by being the chosen six-string of Elvis, Keith Richards, and BB King. They were, and are, the guitar for successful (and aspiring) rock musicians.
Business Bankruptcy Problems and Solution
Like many business bankruptcies, this is the result of a couple of factors. Firstly, this was caused by taking on too much debt, figuring they’ll be able to pay it back later. Secondly, Gibson Guitar filed bankruptcy due to advances in technology. Many musicians and rockers now create with computers, causing guitar sales to drop. This led to another mistake. Thirdly, Gibson responded to the computer musicians by trying to become a lifestyle brand, getting into headphones, speakers, and turntables.
While LP records are making a tiny comeback, one cannot ignore the wisdom of a business struggling due to technology advances deciding its solution is getting into record players.
The better solution now is Gibson Guitar filing bankruptcy. Now it can stop the bleeding, and start paying some of its debt back and get a new beginning.