update: Guitar Center Files for Chapter 11

[golem]

Source: NYT: https://www.nytimes.com/2020/10/23/busi ... iling.html

They missed a $45 million payment on their debt interest. Moody's downgraded them earlier this year. No mention of Chapter 7 vs 11 but I'd guess 11 is more likely. I wonder how exposed major guitar makers (e.g., PRS, Fender, and Gibson) are to this. My recollection from the failed Fender IPO several years back is that they owed Fender quite a bit at that point. I really don't expect we'll see a lot of guitars hit the market cheaply all of the sudden.

UPDATE: Just got the email and it turns out the news was correct.

[Floridian FX]

Don't we have this conversation every year?

[golem]

Sorry if I bore you: https://www.moodys.com/credit-ratings/G ... -600019981

It's the credit rating Gibson has before filing Ch. 11.

[bc rich]

Source: NYT: https://www.nytimes.com/2020/10/23/busi ... iling.html

They missed a $45 million payment on their debt interest. Moody's downgraded them earlier this year. No mention of Chapter 7 vs 11 but I'd guess 11 is more likely. I wonder how exposed major guitar makers (e.g., PRS, Fender, and Gibson) are to this. My recollection from the failed Fender IPO several years back is that they owed Fender quite a bit at that point. I really don't expect we'll see a lot of guitars hit the market cheaply all of the sudden.

[img]

I am rooting for Guitar Center and everyone who works there and try to make it work under crippling dept.
Lets face it , GC is the new 'mom & pop ' store in your in your neighborhood that offers a try before you buy even on special orders .
Online sales are here to stay but excuse me for being a little jeff bezos , ali express etc phobic
,

[Gear_Junky]

I doubt it should affect gear prices directly and immediately. People tend to associate bankruptcy with being a loser, a failure, etc. That is wrong. It is a financial tactic, a legitimate way to protect against untenable debts/payables, especially corporate bankruptcy. Sometimes it's a way out, a way to restructure (that's what it's called, a "reorganization"), to re-focus. In some situations creditworthiness improves after bankruptcy (creditors realize that the entity no longer owes the massive amount of untenable debt). Yes, there's an immediate hit, but it may be followed by a fairly rapid recovery of credit rating, it depends on many other factors. DISCLAIMER: I have not studied GC's books and statements, I don't know if that will be the case in their situation.

But plenty of companies stay open through a bankruptcy and nothing changes for the retail level employees. It is not the same as going out of business.

[Partscaster]

Listen for the bulldozers firing up.

[dabbler]

I doubt it should affect gear prices directly and immediately. People tend to associate bankruptcy with being a loser, a failure, etc. That is wrong. It is a financial tactic, a legitimate way to protect against untenable debts/payables, especially corporate bankruptcy. Sometimes it's a way out, a way to restructure (that's what it's called, a "reorganization"), to re-focus. ..

Yes, it's a legal avenue of recourse, but it does beg the questions: Didn't you see this coming? And why didn't you take adequate steps to prevent it? SOME times there may be good reasons why... but not always.

[golem]

I doubt it should affect gear prices directly and immediately. People tend to associate bankruptcy with being a loser, a failure, etc. That is wrong. It is a financial tactic, a legitimate way to protect against untenable debts/payables, especially corporate bankruptcy. Sometimes it's a way out, a way to restructure (that's what it's called, a "reorganization"), to re-focus. In some situations creditworthiness improves after bankruptcy (creditors realize that the entity no longer owes the massive amount of untenable debt). Yes, there's an immediate hit, but it may be followed by a fairly rapid recovery of credit rating, it depends on many other factors. DISCLAIMER: I have not studied GC's books and statements, I don't know if that will be the case in their situation.

But plenty of companies stay open through a bankruptcy and nothing changes for the retail level employees. It is not the same as going out of business.

That's pretty much what I was thinking. I'm also wondering how exposed the people they owe money to are. Some people might think it's banks and investors, but I understand that certain instrument manufacturers don't require GC to pay for their instruments upfront (e.g., net 30, net 60, or other arrangements).

[mickey]

I doubt it should affect gear prices directly and immediately. People tend to associate bankruptcy with being a loser, a failure, etc. That is wrong. It is a financial tactic, a legitimate way to protect against untenable debts/payables, especially corporate bankruptcy. Sometimes it's a way out, a way to restructure (that's what it's called, a "reorganization"), to re-focus. In some situations creditworthiness improves after bankruptcy (creditors realize that the entity no longer owes the massive amount of untenable debt). Yes, there's an immediate hit, but it may be followed by a fairly rapid recovery of credit rating, it depends on many other factors. DISCLAIMER: I have not studied GC's books and statements, I don't know if that will be the case in their situation.

But plenty of companies stay open through a bankruptcy and nothing changes for the retail level employees. It is not the same as going out of business.

That's pretty much what I was thinking. I'm also wondering how exposed the people they owe money to are. Some people might think it's banks and investors, but I understand that certain instrument manufacturers don't require GC to pay for their instruments upfront (e.g., net 30, net 60, or other arrangements).

Or perhaps like Wal-Mart who doesn't pay for inventory until it is scanned out at a register?

[golem]

I doubt it should affect gear prices directly and immediately. People tend to associate bankruptcy with being a loser, a failure, etc. That is wrong. It is a financial tactic, a legitimate way to protect against untenable debts/payables, especially corporate bankruptcy. Sometimes it's a way out, a way to restructure (that's what it's called, a "reorganization"), to re-focus. In some situations creditworthiness improves after bankruptcy (creditors realize that the entity no longer owes the massive amount of untenable debt). Yes, there's an immediate hit, but it may be followed by a fairly rapid recovery of credit rating, it depends on many other factors. DISCLAIMER: I have not studied GC's books and statements, I don't know if that will be the case in their situation.

But plenty of companies stay open through a bankruptcy and nothing changes for the retail level employees. It is not the same as going out of business.

That's pretty much what I was thinking. I'm also wondering how exposed the people they owe money to are. Some people might think it's banks and investors, but I understand that certain instrument manufacturers don't require GC to pay for their instruments upfront (e.g., net 30, net 60, or other arrangements).

Or perhaps like Wal-Mart who doesn't pay for inventory until it is scanned out at a register?

I'd heard many years ago that maybe GC didn't pay for some types of inventory until it was sold. Whether that's still the case, I don't know.

[LancerTheGreat]

Lol good riddance
I haven't had a decent guitar center experience since, well since ever, sub par at best, even the "premium" s**t they want $3k for that's hung on the wall for 15 years, usually has a garbage setup, wiring issues, cracked/dry fretboards, bulging frets and a layer of dust so thick it should be considered it's own element.

Now the ACTUAL local mom and pop stores can get my business, sure they can't beat some of the crazy deals, but you're usually only looking at a difference of like $50, and they actually clean and take care of their inventory.

If GC hadn't absorbed/ruined musiciansfriend when they did, they definitely would've stopped being an issue at least a decade ago.
Besides, not to mention AMS and Sweetwater who both have followed through exceptionally after every minor and major purchase I've made with them, with the same level of what seems like legitimate care about my satisfaction in the delivery and condition of whatever I've ordered, and I've not had any issues with guitar setups or wiring issues, or a grime layer so thick on a "new guitar" it has its own unique ecosystem.
Even zzounds has better service and treats their stock with an actual degree of respect for the artists who make up their customer base.

[Gear_Junky]

...Now the ACTUAL local mom and pop stores can get my business...ual degree of respect for the artists who make up their customer base.

The ones in my area, that I was aware of, disappeared around the early 2000's, after Sam Ash and Guitar Center moved in at the end of the 90's.

Local pawn shops and other small shops only have junk no-name guitars, and not SX/Agile level of quality. Just discarded student and "first guitar" firewood.

[Mossman]

I feel bad for all the people who would be negatively affected by GC going under, but their problems are of their own making. If they were more like Sweetwater, I'd buy more new gear from them. Sweetwater always gives me a good deal whether there's a sale on or not. Guitar Center won't budge on their prices even if the guitar is dinged up and scratched. I only buy used from GC, and I only go into the stores to try out a guitar before I buy it somewhere else. I've seen people get flamed on other guitar forums for that practice (they call it "show-rooming"), but honestly, I don't see why I should feel obligated to spend more money for a lesser degree of quality and service just because they need my business. I am not a philanthropist and Guitar Center is not a charity. No retailer is entitled to my patronage... they have to earn it.

[Mossman]

...Now the ACTUAL local mom and pop stores can get my business...ual degree of respect for the artists who make up their customer base.

The ones in my area, that I was aware of, disappeared around the early 2000's, after Sam Ash and Guitar Center moved in at the end of the 90's.

Local pawn shops and other small shops only have junk no-name guitars, and not SX/Agile level of quality. Just discarded student and "first guitar" firewood.

Gone are the days of finding great deals at pawn shops (unless you're TMC, apparently ). These days, pawn shops put their best inventory on ebay, and leave all the Staggs and Austins, and low-end Squiers and Epiphones on the wall for the local riff-raff.

[Gear_Junky]

Gone are the days of finding great deals at pawn shops (unless you're TMC, apparently ). These days, pawn shops put their best inventory on ebay, and leave all the Staggs and Austins, and low-end Squiers and Epiphones on the wall for the local riff-raff.

Exactically!

But I also mentioned above that bankruptcy is not same as going under. Bankruptcy is much worse for the creditors/bond holders. It is a "protection" and a "way out" for the entity going "bankrupt".

And I agree, no shame in "show rooming". I always say that my job as a buyer is to arrive at the best price/value that a seller will agree to. There is no commitment or agreement to buy for just browsing/trying inventory.

[Mossman]

But I also mentioned above that bankruptcy is not same as going under. Bankruptcy is much worse for the creditors/bond holders. It is a "protection" and a "way out" for the entity going "bankrupt".

Oh yeah, I'm aware of that... I just meant that if they do go under (which is doubtful), they would only have themselves to blame. There's a lot of talking heads on forums who seem to think that it's our responsibility to support a business just because they sell guitars.

And I agree, no shame in "show rooming". I always say that my job as a buyer is to arrive at the best price/value that a seller will agree to. There is no commitment or agreement to buy for just browsing/trying inventory.

I also feel no compunction to buy something I don't need, just because I played a guitar there for five minutes... I don't know why I should pay $8 for a set of strings that I could get for $5 online, just because I'm temporarily occupying the building. Some people think walking into a store is a commitment to buy. I owe Guitar Center nothing for breathing their air... or (God forbid) using their men's room.

[LancerTheGreat]

The ones in my area, that I was aware of, disappeared around the early 2000's, after Sam Ash and Guitar Center moved in at the end of the 90's.

Local pawn shops and other small shops only have junk no-name guitars, and not SX/Agile level of quality. Just discarded student and "first guitar" firewood.

That absolutely suuucks. A lot of the music stores that used to be around have closed, one of the big ones in Richmond KY shut down the location here, but I think their lexington store is still open. There's another one that just moved to a bigger less rundown location, and then there's a few artisans around the area that sell some seriously top notch handmade instruments (guitars, fiddles, banjos, etc). I guess it helps to be next to "the historic renfro valley" and a few town's around still value artistic endeavors and practices.

[Gear_Junky]

Personally I couldn't imagine buying an instrument sight unseen, but at this point I am very much in favor of that. I think statistically most people have a good experience and when it isn't great, it can be returned (very easily nowadays). I'm kind of ok with ordering guitars online at this point. They are usually not worse than something that's been hanging on the wall for a year (rusty sweaty strings), knocked about by knuckleheads, etc. Even Asian made guitars come pretty decently set up.

[solteroblues]

A few weeks ago, I was in my local GC thinking I would try out a guitar before I bought online, just because history has shown they only have crap on the walls. To my surprise, I found a beautiful Schecter C-1 Platinum, played a few minutes, thought it may be worth buying there. Turned it over and found a big gash in the back. Knowing that finding a good guitar in person is impossible, I asked if they would discount it, sure he said, but we can't offer the 0% interest. WTH? Why not? Knocking $25 off of a damaged guitar was going to hurt their bottom line so much they couldn't offer 0% financing? Come on man!

But, we have no other mom and pops save one last remaining store. It used to be a small local chain of 3, down to just one now. I walked in, and all they had were about 8 Tagima's, all the lowest end. Although they were quite nice for $200, nothing wanted my money bad enough. They also had 2 squire mini guitars, but this offers no competition to GC at all. The only reason they're still in business is they rent band equipment to the local schools.

[slowhand84]

Lol good riddance
I haven't had a decent guitar center experience since, well since ever, sub par at best, even the "premium" s**t they want $3k for that's hung on the wall for 15 years, usually has a garbage setup, wiring issues, cracked/dry fretboards, bulging frets and a layer of dust so thick it should be considered it's own element.

Now the ACTUAL local mom and pop stores can get my business, sure they can't beat some of the crazy deals, but you're usually only looking at a difference of like $50, and they actually clean and take care of their inventory.

If GC hadn't absorbed/ruined musiciansfriend when they did, they definitely would've stopped being an issue at least a decade ago.
Besides, not to mention AMS and Sweetwater who both have followed through exceptionally after every minor and major purchase I've made with them, with the same level of what seems like legitimate care about my satisfaction in the delivery and condition of whatever I've ordered, and I've not had any issues with guitar setups or wiring issues, or a grime layer so thick on a "new guitar" it has its own unique ecosystem.
Even zzounds has better service and treats their stock with an actual degree of respect for the artists who make up their customer base.

Yeah I can't speak to new guitars there because I never buy new to begin with, but almost every single insane steal I have ever gotten on a guitar in the last ten years (sometimes paying $400-$500 for a mint guitar that was $3,000 new) has come solely from GC Used. GC is an absolute goldmine for informed buyers who know what to search for.

That said, this is probably the 5th time they've been in this exact situation (granted, a bit worse this time) so I'm about 90% sure they won't shut down but will just finagle some other way around things to continue carrying on. And I certainly hope they do...I don't want to miss out on these grabs!

[golem]

Yeah I can't speak to new guitars there because I never buy new to begin with, but almost every single insane steal I have ever gotten on a guitar in the last ten years (sometimes paying $400-$500 for a mint guitar that was $3,000 new) has come solely from GC Used. GC is an absolute goldmine for informed buyers who know what to search for.

That said, this is probably the 5th time they've been in this exact situation (granted, a bit worse this time) so I'm about 90% sure they won't shut down but will just finagle some other way around things to continue carrying on. And I certainly hope they do...I don't want to miss out on these grabs!

Yup. I haven't had your luck but you've definitely proven the truth of what you say a few times over.

My local GC has at least one person I enjoy dealing with but then there's the group of dudes [mention]Chad[/mention] caught giving the middle finger that I don't really enjoy dealing with. My local GC did sell me a PRS 513 with a wiring issue they admitting to knowing about when I returned it (but at least the return was no hassle). I really loved the look and sound of the 513 but the wiring issue was more than I wanted to overlook (and if you see inside them they are complicated to troubleshoot).

[slowhand84]

Yeah I can't speak to new guitars there because I never buy new to begin with, but almost every single insane steal I have ever gotten on a guitar in the last ten years (sometimes paying $400-$500 for a mint guitar that was $3,000 new) has come solely from GC Used. GC is an absolute goldmine for informed buyers who know what to search for.

That said, this is probably the 5th time they've been in this exact situation (granted, a bit worse this time) so I'm about 90% sure they won't shut down but will just finagle some other way around things to continue carrying on. And I certainly hope they do...I don't want to miss out on these grabs!

Yup. I haven't had your luck but you've definitely proven the truth of what you say a few times over.

My local GC has at least one person I enjoy dealing with but then there's the group of dudes @Chad caught giving the middle finger that I don't really enjoy dealing with. My local GC did sell me a PRS 513 with a wiring issue they admitting to knowing about when I returned it (but at least the return was no hassle). I really loved the look and sound of the 513 but the wiring issue was more than I wanted to overlook (and if you see inside them they are complicated to troubleshoot).

Yeah I've had a couple of "not as describeds" arrive from GC Used over the years also, but it's all just part of the game. 45 day no questions asked returns make it pretty much one of the only risk free places to buy from where you know if anything is up you'll get a quick and full refund. Because of that, I am never hesitant to chance a guitar sight unseen from GC...and that lack of hesitancy has enabled me to score pretty big there on a regular basis. I could care less about "customer service" from the folks that work there, the only customer service I ever require from them is punching a few things into the computer to accept a return if a purchase goes awry .

[glasshand]

I guess the no questions asked returns is what makes it worthwhile - I browse GC's used section every now and then but frankly most of the time I get turned off by the bad photography and bad descriptions...

[nomadh]

I don't know where any of these mom and pop stores are or ever were. Even 30 years ago GC was the only place that had lots of selection of new guitars while the mom and pops had mostly old weird but interesting used equipment. And now GC has taken that spot too. My local music stores when I was in JHS had a wide selection of bentleys, electras, hondos, lotus and lyle. Maybe it was just a matter of setup but they weren't and I didn't know better so they sucked. Just pretty, shiny horrendous playing kid torture devices. Maybe the mom and pops would have held on at least a bit longer if they actually tried to sell playable guitars. Usually the brand name one was some oddball casio but it was still expensive and too odd to interest me.
I remember an acoustic line called mountain that I actually liked but most of the others were horrendous.
My 2 local GC have always been decent. I'm not much of a retail buyer but my expensive LP was a GC pricematch on an amazon special. Also I'm pretty damn cheap but if I'm in a store and they have what I like especially on a guitar where each one can be so different and so subjective I don't need a full pricematch. It it was a $300 guitar I liked and I knew I could get it online for 290 or even 280 I'd ask for a match but I wouldn't kill the deal for it.When its 50 or 70$ less thats different but 5 or 10%, no. And it is worth some amount of money try out guitars and see whats what. Maybe GC should just charge an entrance fee. $5 to try out gear? Or $2 for every one you test out? I doubt it would go over well but if we don't support the concept it will go away.

[Gear_Junky]

As far as buying new, I've had a number of experiences from Music123, MF and GC, where there were cosmetic blemishes and I contacted them via chat or phone and worked out a discount. They are usually quick to propose a return, but I say that I may be willing to keep the item, if discounted. Frequently they want photos, fine. And I typically explain to them that their loss consists of shipping both ways, which they have to eat, and they still can't resell the item as new. So both parties are better off coming to a mutual agreement. The world is your b-stock