Guitar Center, the latest retail company to suffer financial losses during the pandemic is filing for Chapter 11 bankruptcy.
The company will be funded through bankruptcy by its main owner Ares Management Corporation, equity investor Brigade Capital Management a fund managed by the Carlyle Group.
The Guitar Center is a 61-year old company with 269 locations mainly in malls. It is the biggest musical instrument retailer in the nation. It tried to avoid closing down many of its stores but was unable to do so before the pandemic as footfalls were already decreasing in malls. The pandemic made bankruptcy inevitable.
“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,” Guitar Center CEO Ron Japinga said in a statement.
Although the company expects to stay afloat during bankruptcy, it may not be able to take advantage of holiday shopping this year as fewer people will be spending less on gifts this holiday season. A Gallup poll said that 28% of Americans had said that they will spend less on gifts this year. This percentage is the highest since a similar poll in 2012.
“We will continue to serve our customers and deliver on our mission of putting more music in the world,” Japinga said. He also said that the company expected to complete the process by the end of 2020.