WASHINGTON — Guitar Center filed for Chapter 11 bankruptcy on Saturday, as the coronavirus pandemic upends another company.
The nation's largest musical instrument retailer tried to survive during the pandemic, but it was forced to close many of its stores in March during the nationwide shutdown. It struggled to have customers purchase instruments as the unemployment dipped and the economy sturggled.
The company said in its filing that it will receive up to $165 million in new equity investments to recapitalize the company and reduce its debt by nearly $800 million.
“This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth," said CEO of Guitar Center Ron Japinga in a press release.
Guitar Center has about 300 locations across the United States and said it plans to continue to provide service to its customers at its stores and on its website. The company added that it will still have its call centers and social media pages during the bankruptcy process.
“Throughout this process, we will continue to serve our customers and deliver on our mission of putting more music in the world," Japinga said. "Given the strong level of support from our lenders and creditors, we expect to complete the process before the end of this year.”
Guitar Center said all merchandise credits, prepaid lessons, rentals, gift cards, deposits, orders, financing and warranties will still be honored.
Guitar Center filed for bankruptcy in the United States Bankruptcy Court of the Eastern District of Virginia.
Other major corporations that have filed for bankruptcy amid the pandemic including several clothing sellers like Brooks Brothers, Neiman Marcus and J.C. Penney. Restaurant chains that have also filed for bankruptcy protection including the U.S. arm of Le Pain Quotidien, CEC Entertainment, the parent company of Chuck E. Cheese, California Pizza Kitchen, Sizzler and Ruby Tuesday.
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