Gibson Brands of Nashville, Tennessee, issued a statement this morning outlining its plan to restructure its core business and reorganize under Chapter 11 of the U.S. Bankruptcy Code.

As outlined in the statement “… [Gibson] and its U.S. subsidiaries today filed pre-negotiated reorganization cases under Chapter 11 of the U.S. Bankruptcy Code. The filings will allow the Company’s Musical Instruments and Professional Audio businesses to continue to design, build, sell, and manufacture legendary Gibson and Epiphone guitars, as well as KRK and Cerwin Vega studio monitors and loud speakers, without interruption.”

This news follows months of rumors and speculation regarding the company’s financial and business future centering on the maturation of a series of bonds worth upwards of $500 million this summer. According to the Gibson statement, “The Company has reached a ‘Restructuring Support Agreement’ with holders of more than 69.0% in principal amount of its 8.875% Senior Secured Notes due 2018, and its principal shareholders, that clears the pathway for the continued financing and operations of the musical instruments business as well as a change of control in favor of those noteholders.”

This agreement to transfer control of the company to existing noteholders includes an additional $135 million in debtor-in-possession financing to allow the company to continue operations through this transitional period. As part of this process, Gibson will wind-down operations of its Gibson Innovations business which includes its Philips consumer electronics subsidiary. The acquisition of Philips’ electronic division in 2014 is viewed as a major source of the Gibson’s illiquidity over the past several years.

According to longtime CEO Henry Juszkiewicz—who prior to this reorganization owned 36% of the company per court documents—”… this process will be virtually invisible to customers, all of whom can continue to rely on Gibson to provide unparalleled products and customer service.”

Mr. Juszkiewicz will remain in his position as CEO for the time being, though some sources have indicated that a change in management will likely occur under pressure from existing debt-holders.

Originally posted on REVERB.COM