Gibson Reaches Settlement, CEO Stepping Down

Gibson Brands announced Sept. 6 that the company has reached settlements with its major stakeholders on the guitar manufacturer's reorganization plan.

With this development, Gibson will be able to exit bankruptcy under the ownership of a bondholder group led by private-equity firm KKR & Co. since filing for Chapter 11 in May.

"With the global settlement in place, Gibson is on track to complete its restructuring and continue on its journey of crafting the highest quality of musical instruments known worldwide," said Henry Juszkiewicz, chairman and CEO of Gibson Brands, in a statement. "It is because of the united efforts of all our stakeholders and their commitment to seek resolution that we expect Gibson can emerge from Chapter 11 during the fourth quarter of this year as a stronger company, focused on its core musical instruments business with essentially no debt."

Before the company's key creditor groups came to the settlement, Gibson's reorganization plan was amended for a fourth time. Under the new plan, threats of lawsuits against Gibson creditor GSO Capital Partners LP and owners Juszkiewicz and David Berryman by the company's committee of unsecured creditors have been dropped.

As reported Aug. 10, Gibson's major creditors fought against the company’s reorganization under KKR, claiming the guitar manufacturer was contacted by a number of potential buyers who were interested in making a formal bid.

But Gibson reached an agreement with creditors to close the door on potential buyers and discontinue any conversations about formal bids that may have taken place since Gibson first filed for bankruptcy, according to a Setp. 7 article published in the Wall Street Journal. As a result, the guitar manufacturer remains in the hands of KKR.

Jamie Baird of PJT Partners, an adviser of Gibson's new owners, said in a statement that the company had good performance throughout bankruptcy proceedings and is expected to exit Chapter 11 in less than a month.

"As the future owners of Gibson Brands, we are pleased that the business has performed well throughout the restructuring," Baird said. "With an anticipated exit from bankruptcy less than one month away, Gibson is poised for growth on strong consumer demand, significant available liquidity and a debt-free balance sheet at emergence. We look forward to working with the company's customers, employees, suppliers, vendors and other partners as Gibson gets back to its roots and its next chapter begins."

Once the reorganization plan goes into effect, Juszkiewicz will step down as CEO and assume the position as consultant to the company. Chief Restructuring Officer Brian Fox of the Alvarez & Marsal consulting firm will oversee Gibson until a new CEO takes over.

"I have been honored to lead such a dynamic company in an industry near and dear to my heart," Juszkiewicz stated. "I am excited about a great future for Gibson and its loyal employees, customers and partners."