Trail of Creditors

When Gibson filed for Chapter 11 bankruptcy protection on May 1, the company showed a trail of debt that included names very familiar to the musical products industry.

A document outlining Gibson's top 30 unsecured creditors included mainstays of the music manufacturing community. TKL Products is owed $842,986, according to the list. PT Samick, the manufacturing giant's Indonesian subsidiary is owed $453,665. In addition, Gibson owes Grover Muscal Products $367,639, GHS strings $133,772 and L.R. Baggs $118,195.

"For us, Gibson's bankruptcy is a bit like a bee sting," said Tom Dougherty, owner of TKL. "It hurts, but we are a healthy company, so we'll survive it, and we'll be OK. We look forward to working with the new team, which seems genuinely focused on optimizing Gibson's core, musical instrument business."

Beyond those companies, the creditors include a wide array of manufacturers and suppliers around the world. The largest creditor is the Taiwanese manufacturer Evervictrory Electronics with $2.8 million owed. Lumber producer Pacific Western Timbers is next at $971,758.

During first day motions on May 2, Gibson received an extension to file schedules and statements relating to the reorganization plan. The next hearing will take place May 23 in United States Bankruptcy Court for the District of Delaware.

In a rare break from discussing guitars and guitar players, Gibson's website yesterday posted news of the bankruptcy in the form of a letter from Henry Juszkiewicz, the company's embattled chairman and CEO.

Here is his complete statement:

Dear Friends:

Yesterday, we made a significant announcement that marks the next phase of Gibson's long and storied history. We are re-focusing the Company on the manufacturing of world-class, iconic musical instruments and the continued development of the global Gibson brand, by reorganizing around its core businesses in the Musical Instruments segment. Gibson has reached a Restructuring Support Agreement with its majority stakeholders that clears the way for the continued financing and operations of the musical instruments business.

To implement the agreement, the Company filed today to reorganize under Chapter 11 of the U.S. Bankruptcy Code in Wilmington, Delaware. This will allow our Company to continue to design, build, sell and manufacture Gibson's legendary guitars and instruments without interruption.

We are making every precaution to ensure normal operations for our valued customers. You will very likely not notice any change at all. There will be no change to inventory, pricing or quality of our guitars, musical instruments and Pro Audio. We intend to focus the same amount of time, money and energy in designing and building the best guitars, instruments and Pro Audio equipment that Gibson is known for.

As the Company moves through this process, which we will work to conclude as quickly as possible, there are several important facts you should know and understand about the Chapter 11 process:
- Gibson Brands is not going out of business. The legal process is being used to implement a reorganization of the Musical Instruments division, not liquidation.
- The filings do not change pricing, inventory, ordering or delivery timing of our guitars, musical instruments and Pro Audio equipment.
- There will be no change to the quality of service and support our customers have come to expect from us.
- There will be no changes to our warranty and customer service policies.

While we believe we have put all the right pieces in place to support normal business operations, this announcement may raise questions for you. Please be assured that our commitment to quality products, warranties and customer-service policies are not changing.

Henry Juszkiewicz
Chairman and CEO of Gibson Brands

Update: This story has been updated to add the statement TKL gave to Music Inc. after initial publication.