Last week was a bit shit for industry news to be honest. Firstly Shure broke the hearts of the DJ industry by announcing that they’re shuttering their cart business. And just as that bombshell was sinking in, industry giant Gibson finally fell on its own sword and filed for chapter 11 bankruptcy.
The full statement is here:
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.
Sincerely,
Henry Juszkiewicz
Chairman and CEO of Gibson Brands
This news isn’t a huge surprise. It’s no secret that Gibson has been struggling for some time now. Buying Phillips and reinventing it as a consumer focussed Gibson Innovations proved to be a bad move for them, and it’s one that will be stopped after the bankruptcy goes ahead.
Back in March, Gibson courted KKR (incidentally the owners of Pioneer DJ) to try to work out a debt for equity deal, a venture that subsequently yielded nothing but a gaping chasm between them.
But now things have changed, and sources are saying that KKR is still very much on the scene, and positive rumbling are being made. One assumes that as a major note holder, KKR will be in a stronger position this time around.
So after coming through the bankruptcy, subsequent restructuring, and selling off dead wood, Gibson will apparently refocus on its core instrument business and audio brands i.e. Stanton, KRK (yes I know these acronyms can get confusing), and Cerwin Vega. Yay, so not all bad news for us today. Also of note, buried in the very fine print of the deal is word that Henry Juszkiewicz, CEO of Gibson, will be out after one year, apparently coming as no surprise to many in the industry.
WHAT THIS MEANS FOR THE DJ INDUSTRY
Upon hearing the news, we had assumed that a company like inMusic would be circling the ailing Gibson, ready to pick off some choice morsels to add to its own portfolio. But the mood from inside Gibson appears to be buoyant after hearing the detail of the bankruptcy deal. Given that the core pro audio brands are not being jettisoned like the consumer audio portfolio, if anything this is very good news. While Cerwin Vega and Stanton have not been setting the world on fire for quite a while, KRK is still at the top of the studio monitor business in terms of raw sales.
The vibe is definitely upbeat, with the hope being that more focus and actual cashflow will bring some innovation to the brands that have more or less been sidelined while Gibson tried to become a consumer electronics giant.
AND STANTON?
Speaking strictly from a DJ perspective, it would be a tragic loss to the DJ scene if Stanton was to fail. I don’t think I’m speaking out of turn when I say that they’ve not really tried to impress with their product releases in recent times. Hell, they made new turntables and didn’t even send out PR. They even have a patent courtesy of our own ProfessorBX for a considerably more stable tonearm that has still to make it into production.
It felt like they had stopped bothering, though I’m guessing that much of that may have had to do with Henry Juszkiewic never committing to the DJ industry in even a basic sense. Even phoning it in would be an exaggeration for the level of activity. You can understand why to a degree, but now we’re hoping that they can stop sitting on their hands and start being great again.
There’s no denying that it’ll be an uphill struggle, but the DJ industry needs more players, and I don’t just mean of the CDJ variety. Stanton is a brand with great history, and some great products that can be made into a coherent offer. Again, I have no idea why their turntables sit idle on the sidelines when they were considered by a great any people to be the real successor to Technics.
Over to you Gibson.