Guitar Center will emerge from Chapter 11 bankruptcy by Dec. 31 under a plan that has been confirmed by the U.S. Bankruptcy Court for the Eastern District of Virginia. The retailer plans to reduce its debt by $800 million and raise $350 million in new senior secured notes during the process.
In addition, several banks, led by Wells Fargo and JPMorgan, are expected to fund a new $375 million secured asset-based financing facility that would provide significant additional liquidity for the business. The money will be used to support ongoing operations, invest in strategic growth initiatives and help Guitar Center execute its business plan.
“This approval represents a momentous and positive milestone in our long-term strategy,” said Ron Japinga, CEO of Guitar Center in a statement. “Throughout this process, we have continued to serve our customers in-store and online, helping even more people make music during these unique times. I am grateful for our customers, associates, vendors and other partners for their unwavering support throughout this process. With our strengthened financial position, we will continue to reinvest and grow our business. We are nearing the end of a successful holiday season and I am excited about our bright future.”
Guitar Center first announced its bankruptcy plans in November. The retailer has continued to offer uninterrupted service since then, including receiving goods, shipping customer orders, honoring merchandise credits, prepaid lessons, rentals, gift cards, deposits, orders, financing and warranties.