In February, The Industry Observer reported that the iconic guitar brand Gibson could be facing eventual bankruptcy, as the 100-year-old company owed up to $145 million in bank loans that were issued in 2013.

At the time of reporting, it was revealed that the company was facing serious internal tensions, as CFO Bill Lawrence left the company after less than a year on the job and yearly revenue was described as “far from normal”.

Now, according to Music Radar, the company has officially filed for bankruptcy. The report shows that papers were submitted yesterday morning (May 1st), in Delaware, with the company seeking a Chapter 11 bankruptcy protection.

It is estimated that Gibson Brands is facing up to $500 million in debt, with lenders agreeing to provide a short-term loan of up to $135 million to fund operations.

The company have revealed in a statement that a “turnaround plan” will retain the guitars division and allow lenders to retain equal ownership of the company, replacing current stockholders and current CEO Henry Juszkiewicz. The aim of the plan is to “unburden” the company of its consumer electronics division and place its sole and original purpose on providing the highest quality musical instruments.

Earlier this year Juszkiewicz blamed the company’s financial struggles on retail outlets and its employees for not being able to sell the guitars properly saying, “they see the trend, and that trend isn’t taking them to a good place, and they’re all wondering if there will be a world for brick and mortar stores for much longer. It’s a turbulent world to be a retailer, and many of our retail partners are facing that same issue.”

Gibson Brands said in an announcement early on May 1st, “Gibson will emerge from Chapter 11 with working capital financing, materially less debt, and a leaner and stronger musical instruments-focused platform that will allow the Company and all of its employees, vendors, customers and other critical stakeholders to succeed.”

“Over the past 12 months, we have made substantial strides through an operational restructuring,” said Henry Juszkiewicz.

“We have sold non-core brands, increased earnings, and reduced working capital demands. The decision to re-focus on our core business, Musical Instruments, combined with the significant support from our noteholders, we believe will assure the company’s long-term stability and financial health.

“Importantly, this process will be virtually invisible to customers, all of whom can continue to rely on Gibson to provide unparalleled products and customer service.”

The article was originally published on The Industry Observer