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Guitar Center goes Chapter 11, apparently official


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                                                       But will it save them........................................that remains to be seen. People have been talking about them going OOB for years now. But never with all that has happened in recent years, wait and see how it all plays out.

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Jeepers, this has been limping along, seemingly forever. Barely remember the last thing I bought at a GC. Maybe it was that used O’Connor snakeskin Cali I snagged from online? I think the Focusrite Scarlett 2i2 interface from a few years ago was the last thing I purchased from/in an actual store.

I flipped the Cali and bought another identical interface from another online retailer. Point being, if they do finally slip into oblivion, will anyone other than employees and shareholders even notice?

Edited by diablo175
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Chapter 11, aka "Stiff the creditors, cut benefits, close some locations and stagger on along as best the survivors can".

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31 minutes ago, diablo175 said:

Point being, if they do finally slip into Oblivion, will anyone other than employees and shareholders even notice?

Maybe the 'players' who like to show off their chops playing "Eruption" at full blast in the store will.  :rolleyes: :lol:

Edited by crunchee
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Addendum:  I was up early this morning,  channel surfing after getting bored with the news shows, and encountered a Guitar Center TV ad.  Nothing special about the ad (IIRC, it was for low-level Taylor acoustics) other than it showed up on TV today, after the Chapter 11 announcement.  It kinda showed what demographic GC's aiming for too, guess what Cable TV channel it was on?   Cartoon Network.  :rolleyes: :lol:

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Fender, Gibson, and all the other manufacturers are going to get stiffed on the tons of inventory GC have but probably haven’t paid for.  I think GC will survive by making cuts and laying off their obligations at less-than-parity. 

I hope this teaches the manufacturers a lesson about getting into bed with an 800-pound gorilla.  Maybe it will encourage them to relax their onerous rules about up-front buy-in inventory,  allowing the small mom-and-pops to be dealers with just a few guitars on the wall.  

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My local GC has been very good to me. I've been working with one sales guy Steve, a bassist at very large church.  He's the antithesis of how GC employees are often described.  He's fair on pricing and prompt at checkout. When I lost my special bottle of hazer fluid, he made a bunch of calls and found the right stuff from the GC Pro guy. They've never tried to bullshit me on anything. Price match is never a problem the one time I needed it.  I know what I'm willing to pay and he often comes in at a fair price. 

I'm not rooting for the demise of Guitar Center and the return to Ma & Pa. Ma & Pa isn't open at 730pm on a Saturday night when I need something for a gig or when I just want to get out of the house for a pack of strings.  Which reminds me...

 

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8 hours ago, Rich_S said:

Fender, Gibson, and all the other manufacturers are going to get stiffed on the tons of inventory GC have but probably haven’t paid for.  I think GC will survive by making cuts and laying off their obligations at less-than-parity. 

I hope this teaches the manufacturers a lesson about getting into bed with an 800-pound gorilla.  Maybe it will encourage them to relax their onerous rules about up-front buy-in inventory,  allowing the small mom-and-pops to be dealers with just a few guitars on the wall.  

Sure about that?  Trade creditors are almost always first to the trough.  It's the bondholders that get screwed. 

In our business (telecom infrastructure) we're dealing with bankrupt customers almost continually.  If Fender, Gibson and the other vendors file their claims properly and on time (and please, if I can get that done for my employer, surely their teams of lawyers can and will do a better job) they should be made whole.  It could be the claim is negotiated as some cash + return of goods if the bankrupt company runs out of cash prior settlement of all claims.  That's not the best case scenario, but it beats what the bondholders will get (nothing). 

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Went to the Emeryville GC today for strings. It was a mess. There was stock on the shelves, but the store had a post-apocalyptic vibe. It was completely looted during the rio..., er, "protests", this summer and it seems they have yet to recover. (I have to admit a bit of schadenfreude watching bearded, rigatoni-legged hipsters on the local news, struggling down the sidewalks with newly "liberated" AC30s and Fender Twins.)

Edited by RobB
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The Atlanta GC is apparently their number two in terms of volume, and I've found the employees to be helpful, prices fair, inventory good, and the return policy great. The company seems to have been used as a debt landfill by owners, functioning not as a music store but as a ledger entry. Now vendors owed money will get hurt, employees will lose their jobs, locations will be closed... (mostly) not because they did a crap job at selling instruments and lessons, but because they were a pile of debt that happened to take the form of music stores.

https://pitchbook.com/news/articles/this-day-in-buyout-history-deluged-by-debt-guitar-center-turns-to-ares

"On April 3, 2014, Ares completed a debt-for-equity swap that gave it a controlling interest in Guitar Center, taking over lead ownership of the business from Bain Capital. The move came seven years after Bain Capital bought out Guitar Center for $2.1 billion, a transaction that saddled the instrument seller with a reported $1.6 billion in debt.

In that regard, Ares was a godsend: The firm's takeover reduced Guitar Center's obligations by about $500 million and chopped more than $70 million from its annual interest payments. But as later years have proven, the firm hasn't been able to save what's become another retailer struggling with debt in the wake of a Bain Capital buyout.

Bain Capital agreed to take Guitar Center private in June 2007, paying $63 per share. The deal resulted in a downgrade of the company's credit, as Guitar Center took on a $650 million term loan, $750 million in notes and a $375 million credit facility to support the buyout, according to Moody's."

A real shame for the folks who were not at the investor level.

Edited by polara
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23 hours ago, Rich_S said:

Fender, Gibson, and all the other manufacturers are going to get stiffed on the tons of inventory GC have but probably haven’t paid for.

Gibson will show up with trucks and crew.

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11 minutes ago, murkat said:

Gibson will show up with trucks and crew.

Funny you should mention that.  This just showed up in my Inbox via Reverb:

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Reverb Gibson Demo Shop

All of the guitars have notes of signs of use, but all of them are at full list price with no "Make Offer" option.  Interesting strategy.

May not be connected with the GC repossession at all, but the timing is suspect.

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On 11/24/2020 at 9:41 AM, velorush said:

All of the guitars have notes of signs of use, but all of them are at full list price with no "Make Offer" option.  Interesting strategy.

May not be connected with the GC repossession at all, but the timing is suspect.

Probably no connection. Since when does GC sell, “prototype”-stamped guitars?

Edited by RobB
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