Guitar Center may file for bankruptcy this weekend
Guitar Center could file for bankruptcy this weekend, but stores will remain open as the company restructures.
Read More: Could Guitar Center actually go bankrupt and be forced to shutter?
According to a report from Bloomberg, the retail giant and its private equity owner Ares Management are planning to file a prepackaged Chapter 11 bankruptcy protection as early as this weekend. The company’s creditors have supported the potential filing. In a separate report, The New York Times expects the deal to be finalised “in the next few weeks”.
Chapter 11 will give Guitar Center forbearance on missed interest payments in October and let it keep operating its 300 stores around the US, the reports say. A few investors are also looking to inject more capital into the company to help it restructure, per Bloomberg.
“We are in discussions with our creditors regarding multiple options to strengthen our capital structure and we look forward to a positive resolution,” a Guitar Center spokesman told The New York Times.
Suggestions that the company will soon file for bankruptcy first surfaced on 24 October, when news broke of a missed $45 million interest payment, setting off a 30-day grace period that could end in default.
Earlier this year, in May, Guitar Center was reportedly considering debt restructuring after missing two interest payments. In July, the company managed to exchange $56.4 million in bonds, which saved it from immediate default.
Guitar Center currently has $1.3 billion in debt. Bain Capital acquired the company in 2007 for $2.1 billion, and in 2014 did a debt-for-equity swap with Ares Management, who then took control of Guitar Center.
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Source: www.guitar-bass.net
