Gibson guitars are associated with some of the most famous musicians in history. Eric Clapton, Elvis Presley, David Bowie, Slash, Pete Townshend, Jimmy Page and Bob Marley all used Gibson guitars at some point during their careers. The famous Gibson Les Paul can sell for prices in the thousands of dollars. Despite decades of success, Gibson Brands Inc. recently filed for Chapter 11 bankruptcy.
The bankruptcy provides a lifeline for Gibson Brands, Inc by keeping the company in business and by allowing it to restructure its consumer electronics department, Gibson Innovations. The department is taking blame for Gibson’s financial problems. Gibson Innovations sold products such as headphones, turntables and speakers. Under the Chapter 11 plan, Gibson will wind down Gibson Innovations.
Chapter 11 Bankruptcy Does Not Mean a Company Is Going out of Business
There are common misconceptions about bankruptcy. For example, some people assume that filing for bankruptcy means your credit is destroyed forever. There are also misconceptions about Chapter 11 bankruptcies. Some people mistakenly believe that a Chapter 11 bankruptcy automatically means a company is going out of business.
Chapter 11 bankruptcy can allow a business to restructure its debts while continuing operations. In a Chapter 11 bankruptcy, a business may restructure burdensome debts and agreements while finding new ways to become profitable again. Businesses may also stop creditor collection actions by filing for Chapter 11.
Both small and large businesses can file Chapter 11 bankruptcy. There is no income or debt ceiling requirement for this option. We recently published a blog that went into much more detail on how and why struggling businesses may benefit from Chapter 11 bankruptcy protections.
If your business is struggling with debts, then you should consider speaking with a business bankruptcy attorney. The Kansas City business bankruptcy attorneys at The Sader Law Firm can help you determine whether Chapter 11 bankruptcy would be the best option for resolving your company’s financial situation.