• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • About Strata-gee
  • Contact Us
  • Free Newsletter
  • Sponsor Strata-gee
  • Privacy Policy
  • Latest Posts
  • Strategy
  • Technology
  • Products
  • People
  • Statistics
  • Financial
  • Legal
  • Economic Data
  • Shows & Events

Strata-gee.com

Strategy in TECH...

AudioControl Single Zone Amps
You are here: Home / Financial / Gibson’s Speedy Bankruptcy Exit Hits a Big Roadblock

Gibson’s Speedy Bankruptcy Exit Hits a Big Roadblock

December 19, 2018 by Ted Leave a Comment

Gibson's G-Force auto-tunerI have to admit, Strata-gee was considering moving on from its Gibson Brands (Gibson Guitar) coverage, first started in 2012 when the company made several acquisitions as part of an ill-advised foray into the consumer electronics business. As delineated in our copious coverage, Gibson CEO Henry Juszkiewicz turned to OPM (other people’s money) loading the company up with over half a billion dollars in debt to pursue a business in which the company had no expertise…ultimately resulting in Gibson’s bankruptcy filing in May of this year.

Gibson’s major creditors banded together, put together what some would call a pre-packaged bankruptcy plan and looked as though they would exit bankruptcy late November/early December. They were wrong. As they tried to power out of bankruptcy, they hit a brick wall – the United States Trustee who has filed a serious objection to their motion to exit bankruptcy.

Now what? See what the U.S. Trustee objects to in Gibson’s plans…




I won’t rehash the entire history of the Gibson saga here, as Strata-gee has already published significant coverage on multiple elements of the matter. For those of you new to this story, I recommend you either click on “Gibson Brands” or “Gibson Guitars” in the Tag Cloud in the sidebar on the righthand side of this page, or enter “Gibson” in the Search Bar at the top right side of the menu bar above. You’ll find plenty of background material to digest.

Sonance James Small Aperture

Despite Gibson’s date with destiny, May 1st, when they threw in the towel and filed for bankruptcy, quick planning by major debt holders promised a relatively fast turnaround from bankruptcy. A group of six major debt holders quickly put a plan together to provide: interim financing for continued operations, a change in management with Juszkiewicz and minority partner jettisoned from the company, disposal of almost all of their consumer electronics brands, a discharge of the bulk of their outsized debt, and a new management team.

Looked Efficient; A Nasty and Persistent Buzz

Most of this group’s actions appeared from the outside to be proceeding extremely efficiently and quickly. The major debt holders were clearly in the driver’s seat and had so convinced the judge that the were the best option for the company moving forward, that ultimately Judge Christopher S. Sontchi tentatively approved their plan.

Photo of James Curleigh
James “JC” Curleigh is the new head of Gibson Brands., He was formerly the global president of clothing manufacturer Levi Strauss & Co.

But the fact is, for those watching more closely, there was a nasty and persistent buzz of complaining going on in the background. KKR, one of the largest debt holders driving this process, was viewed by many of the minority creditors as a late-arriving carpetbagger, swooping in to arrive in the last months of the company’s pre-bankruptcy existence to take a major stake and now find themselves as running the company as a significant shareholder. Rumors of quiet backroom deals to “expedite” matters were everywhere.

Final(?) Decree




Then, in early November, the major debt holders filed a motion (known as the “Final Decree”) with the court to, in essence, wrap up major elements of the bankruptcy, discharging all remaining claims relative to 11 of the 12 debtors, and allow the new Gibson to move on with minimal follow-up reporting. Given how golden this group of debt holders had appeared to be with the judge, most news outlets, including Strata-gee, reported its likely exit from bankruptcy.

Sonance James Small Aperture

But hold the phone…the U.S. Trustee has filed an objection that looks pretty powerful. Andrew R. Vara, the Acting United States Trustee for Region 3 says the court should deny the debt holders motion for multiple reasons, including: the fact that they only seek to consolidate 11 of the 12 cases for administrative purposes, the fact that at this point not all existing claims have been fully administered, and the fact that their proposed disposition of the matter is not consistent with the plan tentatively approved by the court previously.

Debtors’ Motive is Questioned

The Trustee’s filing is substantial – twelve dense pages of arguments – openly questioning the debt holders’ motive…suggesting that these “sophisticated debtors” are trying to avoid fees that are required in the administration of bankruptcies – such as the U.S. Trustee’s fees.

“In other words, having received all of the benefits of reorganizing in Chapter 11, the Debtors now seek to complete the administration of their twelve cases for the price of one, and the lowest-priced one at that,” the U.S. Trustee says in their filing.

Gibson CEO Juszkiewicz
Former Gibson CEO Henry Juszkiewicz with Strata-gee and other media at a 2012 press event on a Gibson tour bus announcing their purchase of Onkyo.

The debt holders may have overplayed their hand. The effect of their proposed final decree is to combine the matter for administrative purposes under one entity, as noted in the U.S. Trustee’s filing:

On November 29, 2018, the Debtors filed the Motion, seeking:

(a) Closure of the cases of eleven of the twelve Debtors, including all of
the operating Debtors as ‘fully administered,’ leaving open only the case of a nonoperating Debtor, Guitar Liquidation Corporation, f/k/a Cakewalk, Inc., Case No. 18-11028 (“Liquidation”);

Why Move the Matter Under Cakewalk?




Why collapse the matter down to  a single remaining adversary proceeding (n this case, Cakewalk (Guitar Liquidation Corporation))? Well the U.S. Trustee helpfully offers an explanation for that as well.

Liquidation [Cakewalk] has no operations and makes only de minimis (if any) disbursements, incurring only minimum U.S. Trustee fees, while several of the Debtors in the Closing Cases each make substantial disbursements and incur significant U.S. Trustee fees per calendar quarter.

So it would appear, the U.S. Trustee claims, that KKR and the other major debt holders are looking for a cut-rate bankruptcy, at the expense of legally required administrative bodies (the U.S. Trustee). From the looks of the Trustee’s objection, he does not take kindly to this move – ending his objection with this promise:

The U.S. Trustee leaves the Debtors to their burden of proof on each element of relief requested, and reserves any and all rights, remedies, duties and obligations, including all discovery rights.

The U.S. Trustee Has a Message for the Debtors

The U.S. Trustee ends his objection by declaring that he is reserving his rights. These words, in legal parlance, are heavy with meaning and suggest he will take all actions necessary to pursue what he believes to be appropriate “remedies.”

And so, until the court rules, the Gibson bankruptcy saga continues.



Share this post:

  • Tweet
  • Click to share on Reddit (Opens in new window) Reddit
  • More
  • Click to email a link to a friend (Opens in new window) Email
  • Click to print (Opens in new window) Print

Like this:

Like Loading...

Related

Filed Under: Brands, Financial, Manufacturers, News, Strategy Tagged With: bankruptcy, Gibson, Gibson Brands, Gibson Guitar, Henry Juszkiewicz, KKR

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *


The reCAPTCHA verification period has expired. Please reload the page.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar

Search

Sign-Up for Our FREE Newsletter

loader

Latest Posts

T-Day+1: Tariffs…And So It Begins…

**UPDATED 5/22/25** - See a Selection of Tariff Increases from Around the … [Read More...] about T-Day+1: Tariffs…And So It Begins…

In Its Boldest Move Yet, AVPro Global Acquires Control Solutions Maker RTI

We got a blockbuster announcement late this afternoon as AVPro Global announced … [Read More...] about In Its Boldest Move Yet, AVPro Global Acquires Control Solutions Maker RTI

  • T-Day+1: Tariffs…And So It Begins…
  • ‘Legendary’ Judge Alsup Featured in Strata-gee May Go ‘Inactive’ in 2025
  • Masimo Updates SEC on Its Progress Recovering From Recent Cyberattack
  • Harman Hits Voxx Int’l & Klipsch Group with Major 13-Count Lawsuit

Categories

Sponsors

Crestron Infra-Bass
AudioControl Single Zone Amps
Sonance James Small Aperture
Savant
Oasys Residential Technology Group

Tag Cloud

acquisition Amazon Apple AudioControl B&W Bowers & Wilkins CEDIA CEDIA Expo CES Control4 Core Brands COVID-19 Crestron D&M Holdings Denon Emerald Expositions Foxconn Gibson Brands Gibson Guitar Google Henry Juszkiewicz Hon Hai Precision Industry Co. housing starts Integra Joe Kiani LG Marantz Masimo Nortek OLED Onkyo Panasonic patent infringement Pioneer Samsung Savant Sharp smart home SnapAV Snap One Sonos Sony Sound United SpeakerCraft Toshiba

Footer

Got News?

HEY PR & Marketing Pros: Have NEWS for Strata-gee readers?

Send it to: HotNews@strata-gee.com

Meta

  • Log in
  • Entries feed
  • Comments feed
  • WordPress.org

Sponsor Strata-gee

Strata-gee Ads

Archives

Translate

Ted Green Bio

A former dealer, manufacturer, distributor & more. Focusing on business strategy, my goal is to help you make better decisions for greater success.

Follow Ted Green

  • Facebook
  • X
  • LinkedIn
  • Instagram

Copyright © 2025 Strata-gee.com · The Stratecon Group, Inc. All Rights Reserved · Log in

%d