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Report: Guitar Center considering bankruptcy

The company is exploring different options with creditors as profits drop during the pandemic.

October 28, 2020
Report: Guitar Center considering bankruptcy Photo by VALERIE MACON/AFP via Getty Images  

Music retailer Guitar Center is considering multiple restructuring options including bankruptcy in the wake of a missed $45 million bond payment, according to reports in the New York Times and Bloomberg. The company has amassed nearly $1.3 billion in debt, a financial situation worsened by store closures caused by COVID-19 lockdowns.

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It's the company's second brush with bankruptcy this year; in April, Guitar Center missed another interest payment but avoided bankruptcy thanks to a distressed debt exchange. However, this time around the company reportedly contacted its creditors with a plan for bankruptcy that would allow the company to file for bankruptcy this year and "[return] from it in early 2021," according to the Times.

Whatever plan is decided on may need to happen fast: the $45 million bond payment was reportedly missed earlier this month, and the Times reports that Guitar Center could go bankrupt in November.

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Guitar Center opened in 1959 and runs 300 stores across the United States as well as 200 associated outlets. In a statement to Bloomberg, a source from the company said online sales are strong and the company began reopening select storefronts in July.

Report: Guitar Center considering bankruptcy