Guitar Center, the largest U.S. retailer of musical instruments, filed for bankruptcy protection over the weekend as the latest retail victim of the coronavirus pandemic.
The company, which was struggling to compete against online rivals even before the pandemic, was hit hard when it was forced to temporarily close most of its nearly 300 stores earlier this year. Guitar Center continues to operate a Chattanooga store at 2200 Hamilton Place Boulevard near Hamilton Place Mall in East Brainerd.
It entered Chapter 11 restructuring proceedings in the U.S. Bankruptcy Court of the Eastern District of Virginia. It will continue to pay its vendors and employees in full, it said in a news release.
Guitar Center said it had struck an agreement with its creditors in support of a plan that would reduce its roughly $1.3 billion in debt by $800 million. To help support its bankruptcy, it said it had secured new financing from investors that include a fund managed by its current owner, the private equity firm Ares Management Corp., as well as funds managed by the hedge fund Brigade Capital Management and the Carlyle Group, also a private equity firm.
The company said it expected to emerge from bankruptcy by the end of the year.