The biggest U.S. retailer for musical equipment and instruments, Guitar Center Inc, has filed for Chapter 11 bankruptcy, in the United States Bankruptcy Court of the Eastern District of Virginia, despite the fact that music lovers continuing to shop online during the coronavirus-induced COVID-19 pandemic.
In a statement, the retailer said, it has negotiated for a $375 million in debtor-in-possession financing from its existing lenders and intends to raise $335 million in new senior secured notes.
The development comes in the wake of the company reaching a restructuring deal with key stakeholders that includes debt reduction to the tune of nearly $800 million as well as new equity investments of up to $165 million to recapitalize the company.
In a court filing, the company said, it has between $1 billion and $10 billion of both assets and liabilities.
Guitar Center, which owns around 300 stores across the country, said it does not expect any disruption in its business operations.
While Houlihan Lokey acted as the company’s financial advisor Milbank LLP served as its legal counsel; BRG served as its restructuring advisor.
Guitar Center began in 1959 as a store selling home organs in Hollywood.