AUG. 10 | GIBSON BRANDS | COMPANY
Gibson Receives Court Approval
for Reorganization

Gibson Brands announced Aug. 1 that the company's disclosure statement has been approved by a Delaware bankruptcy court.

The approval of the latest version of the disclosure statement, which was supported by the creditors' committee, will allow the guitar manufacturer to begin soliciting votes for its reorganization plan after filing for Chapter 11 bankruptcy in May.

Ballots will be due Sept. 14, and if the plan is approved, a confirmation hearing has been set for Sept. 27.

"We are extremely pleased by the court's approval of our disclosure statement, which is a key step toward the company's successful emergence from Chapter 11," said Henry Juszkiewicz, Gibson Brands CEO, in a statement. "Our employees have worked very hard to help us stay on track to emerge from Chapter 11 as planned, and we are grateful for the continuing support from our creditors, partners and vendors."

The reorganization plan will give private-equity firm KKR control of Gibson, according to an article published by the Nashville Post on Aug. 3.

Bloomberg reported Aug. 1 that holdout creditors, including a division of Blackstone Group, have pushed back against Gibson's reorganization under KKR, claiming a number of potential buyers have contacted Gibson about making formal bids. But KKR representatives responded, saying any potential buyers would have to pay off at least $375 million of Gibson's debt first as well as the interest accrued since the company filed for bankruptcy.

According to the Bloomberg report written by Steven Church, U.S. Bankruptcy Judge Christopher Sontchi, who gave the OK to Gibson's disclosure statement, warned that he may reject Gibson’s reorganization plan proposal later this year if the guitar manufacturer's managers cannot justify their deal with KKR. If the proposal fails to win his final approval, any potential bids for the company will drop, Sontchi told Bloomberg.

"If they are making dumb decisions, Congress has given them the right to be stupid," he was quoted as saying in the Bloomberg article. "Ultimately this is going to come down to a dispute over value."