CA-Based Guitar Center Files For Bankruptcy

WESTLAKE, CA — Guitar Center filed for Chapter 11 bankruptcy over the weekend, but the California based retailer announced that business operations will continue regardless. The music retail giant announced plans Saturday to "recapitalize" the company.

Guitar Center first opened in Hollywood in 1959 as a storefront selling home organs. Throughout the decades, the 61-year-old company became one of the largest retailers selling music instruments in the United States, with over more than locations.

But after the threat of COVID-19 closed businesses nationwide intermittently, Guitar Centers across the state and the country began to lose necessary foot traffic to stay afloat, as many of its storefronts are located inside malls.

In the midst of an economic fallout caused by the pandemic, the company offered virtual music lessons and attempted bolster online sales, but it hasn't been enough to keep the company above water.

On Nov. 13, the company struck up a restructuring plan with key shareholders to reduce debt by $800 million and was supported by $165 million in new equity investments, Guitar Center officials wrote in a statement Saturday.

"Throughout this process, we will continue to serve our customers and deliver on our mission of putting more music in the world," Ron Japinga, Guitar Center CEO wrote Saturday.

The investments will be managed by the Private Equity Group of Ares Mangement Corporation, with funds managed by the Carlyle Group and Brigade Capital Management.

Japinga said that he expects to complete the restructuring process by year's end.

“This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth," he wrote.