As music lovers switched to online shopping due to the coronavirus
pandemic, Guitar Center Inc, the largest US retailer of music instruments,  lessons, repairs, rentals and equipment filed for Chapter 11 bankruptcy on Saturday.

The filing of Chapter 11 bankruptcy allows the company to reorganise their
business affairs, debts and assets.

The retailer has a total of $375 million in debtor-in-possession financing
form and has agreed to parley with their existing lenders. This allows them to
stay in business while they work on their restructuring plan. They propose to
raise $335 million in new senior secured notes.

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The company came to a restructuring agreement with key stakeholders earlier
this month. The agreement includes debt reduction by nearly $800
million and new equity investments of up to $165 million to rebuild to company.

In a court filing, the company admitted to having assets and liabilities
worth $ 1 billion – $ 10 billion.  

Guitar Center, with nearly 300 established stores spread out across the
country assured that business operations would not face any hindrance.

Milbank LLP served as
legal counsel, BRG served as restructuring advisor, and Houlihan Lokey was the
financial advisor to Guitar Center Inc.

Guitar Center was
founded in 1959, then called ‘The Organ Center’ and used to sell home organs in
Hollywood, Los Angeles.

They filed for Chapter
11 bankruptcy in the United States Bankruptcy Court of the Eastern District of
Virginia.