Guitar Center, the country’s largest retailer of instruments and musical equipment, joined a growing list of companies impacted by the economic toll of the COVID-19 pandemic, filing for bankruptcy.
The Los Angeles Times reported the bankruptcy.
Guitar Center has about 300 stores across the U.S., including two in the San Diego region, in La Mesa and San Ysidro.
Its sister brands include Music & Arts, which has more than 200 stores specializing in band and orchestral instruments, according to the publication.
Guitar Center claims it has liabilities of between $1 billion and $10 billion, with a similar range for its assets, according to the filing.
The filing in the Eastern District of Virginia will allow the Westlake Village-based company to stay in business as it seeks to carry out a restructuring plan, the report said.
A restructuring support agreement announced Nov. 13 requires new financing backed by existing creditors, in addition to $165 million in new equity investments from its parent company, Ares Management Corp.
The Carlyle Group and Brigade Capital Management also must invest equity.
Moody’s Investor Service explained that the coronavirus shutdown has hit nonessential retailers hard. Guitar Center was particularly vulnerable because musical instruments are highly discretionary items.
The company’s stores shut down in mid-March when the pandemic began in earnest. Since then, according to the LA Times, it has reopened some locations while maintaining online operations.
According to the report, Ares acquired the company in 2014 in an out-of-court restructuring of Guitar Center’s substantial debt load. Bain Capital LP took the company private in 2007.
– City News Service