The company has already sold off some noncore brands, acquisitions that contributed to its burdensome debt load.
Gibson was founded in 1894 and is based in Nashville, Tennessee.
However, it's not all bad news, according to Bloomberg. Its guitars are USA -made, with factories in Nashville and Memphis, Tennessee, and Bozeman, Montana. Gibson has begun the liquidation process for its debt-plagued, struggling global Gibson Innovations division, which sells headphones, speakers, accessories and other electronics. Throughout their century-plus of existence, countless musicians-from famous rock stars to local barroom heroes-have used Gibson guitars to create the soundtrack to our world. But the purchases drained cash, and earnings plunged.
Management, creditors and consumers alike see strong potential for Gibson's iconic music business.
James Alan Hetfield, rhythm guitarist with Metallica uses a white Gibson "Flying V"; Keith Richards of The Rolling Stones had a custom Les Paul; and Jimmy Page of Led Zeppelin also played a Gibson Les Paul.
In recent years, Gibson faced tighter credit terms from its suppliers and growing pressure from new import regulations on rosewood, a crucial material for the company's high-end instruments, according to S&P Global Ratings. It also announced that it will close its Innovation unit as part of the Chapter 11 filing.
Fox has described the electronics business as having become "trapped in a vicious cycle in which it lacked the liquidity to buy inventory and drive sales".
The non-core brands essentially means everything outside of their line of guitars, including the home audio business that Gibson acquired from Phillips back in 2014 to the tune of $135 million. Cross-defaults had threatened the musical instruments business, and the company has been working with advisers since late 2017 to try to solve the problem. The decline in the company's fortunes is said to be linked to the failure of its consumer electronics business overseas, which has sustained serious losses over a substantial period of time.
With assistance from Bloomberg's Dan Wilchins.