The pioneer of the electric guitar is facing an end: The cult company Gibson is no longer able to pay its bills. Gibson is in debt to about 500 million dollars with creditors and can only be saved from bankruptcy through radical restructuring.
To be able to restructure, the company has applied for preliminary creditor protection. Gibson has already presented a restructuring and reorganization plan, which more than two-thirds of the creditors would have agreed to, said company chief Henry Juszkiewicz. As part of the agreement with creditors, Gibson Guitar is set to receive a new loan of 135 million dollars, according to Juszkiewicz. Business operations can be maintained during the restructuring.
The expansion into other industries became a downfall for Gibson Guitar. The company, whose guitars have been played by legends like Elvis Presley, John Lennon, Paul McCartney, Johnny Cash, or Jimi Hendrix, is in acute financial distress despite an annual revenue of around 1.2 billion dollars. There had been warnings for some time about problems with repaying bank loans and bonds. In recent months, Gibson Guitar has tried to raise money by selling stakes, real estate, and business units – butapparently not enough.
The financial problems of the world-famous company, whose roots go back to 1894, arose during its expansion into other industries. About four years ago, Gibson bought the headphone and speaker division of the Dutch company Philips for 135 million dollars – a bold acquisition that is considered one of the main reasons for the company's misery. In 1936, Gibson sent the world's first electric guitar into serial production and sells more than 170,000 guitars a year in around 80 countries.
Orville Gibson is, by the way, the namesake of the later Gibson Guitar Corporation. He was born in 1856 in Chateaugay, New York. In 1881, the young Gibson was listed in the registry of Kalamazoo in the state of Michigan. After some other professional activities, he ran a store specializing in mandolins for musical instruments in Kalamazoo starting around 1894. During this time, he experimented with transferring manufacturing techniques from violin making to plucked instruments. In 1898, he receiveda US patent for a construction principle for archtop mandolins and guitars. In early 1902, Gibson sold the rights to use his name and the patent to a group of businessmen who founded the Gibson Mandolin-Guitar Manufacturing Company in the same year and hired Orville Gibson as a consultant. The first catalog of the Gibson company was published in 1903 and offered mandolins, mandolas, guitars, and 'harp' guitars. Already in the same year, Orville Gibson left the company, after which he was granted aannual settlement as well as a lifelong monthly pension. Orville Gibson died in 1918 at the age of just 62.
