Guitar Center Announces Bankruptcy Plan

Guitar Center Inc, the largest US retailer of music instruments and equipment, announced Saturday that it has filed for Chapter 11 bankruptcy.

The Company has secured new financing to implement its bankruptcy plan, which they say “will deleverage the Company’s balance sheet, enhance financial flexibility and provide additional liquidity to continue to support its vendors, suppliers, and employees.”

The plan is intended to allow Guitar Center and its related brands (including Music & Arts, Musician’s Friend, Woodwind Brasswind and AVDG) to continue to operate as normal while the transaction is implemented. Guitar Center says it will continue to meet its financial obligations to vendors, suppliers, and employees, and make payments in full to these parties, without interruption in the ordinary course of business.

The company says that it will honor credits, prepaid lessons, rentals, gift cards, deposits, orders, financings and warranties.

Guitar Center plans to continue to provide uninterrupted service to its customers through its existing channels, including its stores, websites, call centers and social media pages, and will continue to receive goods and ship customer orders as usual. Merchandise credits, prepaid lessons, rentals, gift cards, deposits, orders, financings and warranties will be honored.

The company notes that it is working to ‘optimize its real estate portfolio’ to reduce its debt and focus on its most profitable investments and locations.

50 thoughts on “Guitar Center Announces Bankruptcy Plan

  1. Guitar Center was a kind of the “corporate behemoth” that drove many small, independent “mom & pop” music stores out of business– while directly competing as a brick-and-mortar business. Then they got out-behemothed by online retailers– even while they had their own online presence. There’s another story about Bain Capital and Guitar Center, but I don’t know much about that.

    GC’s subsidiary Music & Arts is another one. As one of the major band & orchestra instrument rental companies, in addition to online rentals, they set up rental programs through independent stores across the country. One nearby store tried using M&A’s instrument rental plan and soon dropped it because it was unnecessarily costly and difficult to run, opting to create their own rent-to-own program which provided better value for customers, while still being profitable for the store.

    I really can’t muster any nostalgia for Guitar Center stores. They are kind of suffering a similar fate to that which they cheerfully dealt to smaller stores. As a side issue, some major manufacturers contributed to the loss of locally owned stores by requiring higher minimum orders than most of them could reasonably meet.

    1. > instrument rental plan and soon dropped it because it was unnecessarily costly and difficult to run, opting to create their own rent-to-own program which provided better value for customers, while still being profitable for the store.

      At this point most band instruments for elementary and high school should simply be bought off amazon from cut-rate chinese resellers. For less than the cost of a semester’s lease one can buy an instrument outright. I am talking about violins, guitars, cellos, trumpets, trombones, clarinets, flutes, and a few others. In most cases the instruments received are fine. In other cases any competent band director can adjust the instruments to get them playable. In some, not many, cases one needs to swap out certain elements. If the student gets good enough (few do) then one can look into buying a good quality instrument like a Yamaha. Custom made rosewood solid silver etc instruments handmade by known craftsmen are really only for established professionals. Yes, solid silver flutes sound better. Your kid doesn’t need one. Kids in elementary school shouldn’t be playing these unless their parents are crazy or just enjoy throwing money away and/or posturing to impress other rat racers.

      1. This store (and many others) offer these plans where parents make pmts, but can transfer their balances to step-up instruments or different instruments.

      2. No. The Chinese instruments off Amazon (like Mendini) are often completely unplayable.

        My wife and I are music teachers and see so many students bring in these garbage instruments that are either already useless or so quickly go out of adjustment that they are eternally in the shop, and the students quickly lose interest because they can’t participate.

        At least local stores doing rentals realize they have to keep those instruments in good repair if they want to keep business. Low quality instruments are one of the major factors that result in kids quitting music in middle school through no fault of their own.

        1. > No. The Chinese instruments off Amazon (like Mendini) are often completely unplayable.

          No, that’s completely untrue. Mendini’s great. Most their stuff there’s one model and it’s perfectly fine. Their brass and woodwinds the finish wears off after a few months of playing, but no problems with valves, keys, or fit. They are very playable and last a long time. One can however do better by upgrading mouthpieces, reeds, ligatures, etc. With their strings don’t buy the cheapest model. For example they always have some $30 violin made of plywood. Go for the $80-$150 range instead, you’ll get a spruce soundboard, maple back, decent finish, and a good horsehair bow or two. The top level one that’s like $300 has much nicer finish but isn’t necessary for a student. Upgrading the strings is worth it obviously, and someone who knows what they are doing needs to set up the instrument the first time, but that’s what competent music teachers do anyway for our students.

          I see all these comments on amazon from “music teachers” who say what you say but it’s nonsense. There’s reviews on youtube by experienced players for most of the instruments they have and it’s very common they end up saying that the instrument is decent and for the price is great.

          1. So this is definitely a YMMV thing, but I’ve owned a lot of the cut-rate Chinese instruments and I’ve also helped others with theirs. It can really be a crapshoot… it has nothing to do with “Chinese” and has everything to do with “cut rate.” As you said, avoiding the bottom of the barrel is definitely important, but even so, I’ve seen a ton of issues with more classical stringed instruments.

            It’s not just replacing the strings (which as you said is essential) but for the instruments I’ve worked with, it’s also to precisely file the nut (but not too much) to deal with string height / seating issues, as well as shaping the bridge to both for the body and the strings. The nut in particular is something that you can screw up beyond simple repair. I’ve also had to replace tuning pegs in many cases, and I’ve seen more than one collapsed sound post.

            I’ve been able to make some of them into decent instruments with a lot of hard work, others just ended up being so difficult to play without issue that it would make learning on one difficult, and could easily put someone off of the instrument.

            It’s reasonable to expect music teachers to know some basic setup – bridge placement, string replacement, and all the other routine things, but expecting them to do the sort of work I’ve had to do is asking quite a bit, more so when there’s no guarantee that you will end up with a playable instrument, and I doubt many would be willing to take on that sort of liability (and rightfully so)

            A Chinese manufacturer with local representation that will stand behind their product is the key to doing this well, and while you may pay a bit more than a complete no-name, it’s worth the price difference. Even better if their local representation handles initial setup.

            As far as rental programs go, I have found those are best managed by the schools (assuming they are getting the budget they need for it) – the rental can be priced more reasonably as a general rule, which is the only way someone who grew up like I did can afford to learn upright bass or similar.

            1. Hey Bitshifter, I appreciate your nuanced response and agree with your points. Thanks.

              Having a local luthier is extremely helpful for the instruments that have problems beyond what’s tweakable, but not all areas have one within driving distance and there’s so many schools so that’s an important issue. Of course with the cost difference one can afford to just throw away the bad instruments… which feels wrong. The amazon Mendini stores have been accepting of return/exchanges of trouble instruments in my experience, but that’s a hassle to do. It seems to me they check out the instruments before reshipping them. I’ve never had a broken post, I’ve had one that fell over and was able to reset it using online tutorials and a special tools, but that’s an advanced maneuver. It’s definitely true one can have less hassle by paying more. It’s also the case one can save a tremendous amount and get a decent instrument going this route most of the time and can do an exchange when it’s not. But someone who knows something about the instruments needs to be in the loop.

          2. Saxophones without spring guides to keep the palm keys closed, bent stacks that won’t close so that the instrument can’t play any notes requiring the right hand keys to be closed, trumpets with plastic valve parts that wear out after only a few oilings (and even faster if a middle-schooler is doing it themselves and messing it up), flutes missing springs under trill keys…but what do I know, I’m just a “music teacher.”

            It’s not nonsense, it’s a different experience with the products.

      3. Most of low price guitars are unplayable and should not be chosen by parents for their kids. A young talents (or hobbyists) need a quality to love their instruments, how is sound, how good are these instruments tactile.

        In terms of electric guitars it’s no need to buy a Am Fender for a starter but good Squier guitar will be good in comparison with all these flights and other no-name guitars that cant even be in tune during playing.

        Consumerism is not about buying well priced things but buying a lot of sh***ty stuff

    2. “There’s another story about Bain Capital and Guitar Center, but I don’t know much about that.”

      Hers how it goes…Bain Capital snapped up GC and purposely loaded it up with debt. Bain used that borrowed money that debt to pay Bain big dividends and salaries.

      When the debt bill came due for GC, they declared bankruptcy because all that money had been moved out of GC to Bain, leaving just a big ass pile of highly leveraged assets. This is very typical for Bain and companies like them. It should be illegal but somehow it’s not.

    3. maybe something good will come of this…there will finally be a gap in the market for “mom & pop” stores to return now? wouldnt that be nice! heres hoping

    1. Yeah that’s Mitt Romney’s company that did the leveraged buy out. They use the company’s own value to get a loan to buy the company, then they ransack the company’s assets, paying themselves huge salaries and dividends, shafting the employees. Sometimes they sell the land under the stores to another company they own and have the company pay huge rents to themselves to siphon off even more of their assets. Eventually they declare bankruptcy and that’s the point where they ransack any existing company held pensions for the employees. Mitt Romney has done this to hundreds of companies, always from the same play book. He’s a complete gangster that has destroyed more american jobs than anyone in history.

      1. Very interesting – so Romney is actually the owner or CEO of a private equity firm known for looting retailers via leveraged buyouts?

        Disappointing, he seemed like a nice guy.

  2. Unfortunately this is for the best. Guitar Center is not a functional organization and hasn’t been for over a decade. Alas in much of the US they are the only music retailer left at all. This will affect manufacturers being able to access retail at all.

  3. Guitar center was a hopping place in the nineties when they had a plethora of synths in all shapes and forms ready to noodle around with and drool over (Arlington Heights, IL). It gradually became nothing more than a bunch of controllers and home pianos. In their defense, they never lacked for bro bravado being best represented in their sharky sales drive. Piss on that company.
    No matter, Sweetwater has treated me right for 20 years. Even though I’ve had two Guitar Centers and a Sam Ash easily within ten miles I have even gotten something as simple as cables from Sweetwater rather than from the others.

    1. I worked at Villa Park in 1999. We still had decent synths at the time (the Tritons were huge among the hip hop heads; I was more of a sampler guy), but it was already headed in another direction.

  4. As mentioned above, GC put a lot of small indie stores out of business, so they have earned their Karma. I’ve known a couple of people who tried to work for the store and their unfair and bizarre employee practices are a model for disaster. Last thing I bought from Musician’s friend was a synth that arrived without a power cable and they refused to send one. Sweetwater has been quite a good alternative so far.

  5. GC can burn to the ground, and it would be a good thing.

    They have had so many shady practices, like selling you used gear and passing it off as new, for new prices. Stock was always crap, nobody who worked at the store knew enough to do more than put a sticker on a box, guitars overpriced, and predatory competition with other music stores in the area. I’d love to see this gorilla burn down or at least bust up, to loosen the market back up for local stores that give a damn and are run by someone other than venture capitalists.

    1. I agree brick & mortar GC was a terrible place to shop, but it was still a place where you could shop.

      And… Musician’s Friend… ;-(

      1. They are predatory on the wholesaling side. Because they are the largest retailer in the US, they can dictate to manufacturers how much to charge, how many units should be in a minimum order, how and when to discount merchandise, etc.

        This is how they engage in predatory competition but does not equate to lower prices for us consumers.

        1. “Because they are the largest retailer in the US, they can dictate to manufacturers how much to charge, how many units should be in a minimum order, how and when to discount merchandise, etc.”

          The minimum order thing is interesting; so you’re saying something like Fender and Gibson stopped selling small orders of 5 guitars to independent retailers because Guitar Center somehow mandated minimum orders of 50 or more?

          I guess that might explain how Sweetwater managed to survive, since they would presumably be able to place the minimum orders.

  6. If you aren’t already buying from Sweetwater instead, you’re doing it wrong.

    I can’t imagine what it would take to get me to purchase anything from GC nowadays, and I have one within walking distance of my home.

      1. Lower prices than what’s available online would get me in the door, for sure. Free tutorials/workshops and same day delivery would be nice but wouldn’t bring me back on their own.

  7. Purchased a new mother-32 from the website, was shipped a used mother-32 with no patch cables. Was shipped a used MPC4000 that didnt work, never turned on. The stores here in pittsburgh are always empty, of people and gear. If anyone believes that “operating as normal” BS, shame on you. My advice, steer clear.

  8. I’m in the Midwest and have appreciated having a Guitar Center in town. In most areas, there’s no other place to go and try electronic music gear.

    They’re not great, but for a lot of us, it’s the only local option, so I’d hate to see them go.

    1. This exactly. Though I guess it opens up space for more competition, maybe.

      I really do like being able to try a synth out in person before I order it for cheap online. ;-p

  9. fuck guitar center. worst 4 years of my life.

    Being near toronto, i would proffer long and mcquade coming to the u.s. because they actually seem to give a shit to do the right things that custtomers want.

  10. When I was living in the states, we had a GC very near my house, which I thought would be great! Of course it wasn’t. The employees were mentally lost, not super helpful, not super knowledgeable even when they wanted to help, and the stock on hand was always missing something I wanted to try out. In their defense they did improve a little bit over the 3 years I lived there, but it was “too little too late” in my book. If my GS was representative of the majority of their stores, it’s not much of a surprise they’re tanking, even without the impact of corona.

  11. Bought 3 guitars and amp. 4500.00 worth
    Wouldn’t even give me a pack of strings free
    Kept shoving the 600.00 extended warranty

    Paid cash up front

  12. Used to go to guitar center all the time, because local shops had a limited supply. I like the new system where local shops become the big sellers. I’d rather buy from Perfect Circuit, Vintage King, small shops through Reverb, and other specific retailers online than have the same brick and mortar shops selling the same stuff across the country. I’m sure something is hurting with smaller shops, but I feel like online in some of these niches have made a better situation for small shops. You definitely see it with synth shops. Anybody working at these shops able to confirm or deny?

  13. I bought a pedal two weeks ago as an impulse buy. A few observations. Insanely high pricing. Too many employees – better to pay 3 and keep the lights on than 6 and fail. One employee literally verbally attacks anyone entering the store to use the sanitizer when a simple request would do. Honey vs. vinegar I guess. Four standing around doing nothing. And one young gal, who I am sad today may be out of a job. Hopefully, her lone customer service will be rewarded elsewhere. As for the 35 year old manager, who couldn’t give me the time of day on my ten minute 100 dollar plus purchase – have fun in this economy. Who you hire to be the face of your store matters.

  14. I’m a college grad who’s had dream jobs for most of my professional life. In one pretty shitty downturn though, I signed on with GC as a salesperson. Mind you, I was depressed at the time, but the co-workers were either dumb – and they throw you out on the floor with ZERO training to do even the most basic tasks, like operating the register – to the rat eat rat atmosphere where co-worker says “I talked to that guy yesterday” to get a split on a commission worth $8 or so, the atmosphere was so extremely toxic that I quit the 2nd day after my shift and bawled my eyes out for a good hour trying to purge the experience.
    Luckily, I persevered and today I am back in IT, making great money, working from home, and super grateful that I don’t have to get a headache all day from kids shredding or out of tune strumming, etc.

    I miss the mom and pops days, when everyone did know your name and how you played was who you were.

  15. I’m a college grad who’s had dream jobs for most of my professional life. In one pretty shitty downturn though, I signed on with GC as a salesperson. Mind you, I was depressed at the time, but the co-workers were either dumb – and they throw you out on the floor with ZERO training to do even the most basic tasks, like operating the register – to the rat eat rat atmosphere where co-workder says “I talked to that guy yesterday” to get a split on a commission worth $8 or so, the atmosphere was so extremely toxic that I quit the 2nd day after my shift and bawled my eyes out for a good hour trying to purge the experience.
    Luckily, I persevered and today I am back in IT, making great money, working from home, and super grateful that I don’t have to get a headache all day from kids shredding or out of tune strumming, etc.

    I miss the mom and pops days, when everyone did know your name and how you played was who you were.

  16. i still get sketchy private messages from one of their sales reps to “meet after work for some special deals” – even if i moved away from the US years ago…

  17. I hear a lot of “mom and pop” talk. However, no mom and pop stores within 100 miles of my location carry anything but guitars bass and drums. The only place within a decent drive (55 miles) is Guitar Center if you want to try out a range of synths and other keyboards. It takes a large retailer to carry a large range of big ticket items like pro keyboards. So I think there is a place for them.

    That being said, I had an issue with a Subsequent 37 that I returned immediately (supposedly new, but opened box, used, and faulty key bed), and then decided to use the money for a D’Angelico EXL-1 instead (purchased at a big discount at GC).

  18. I lament the demise of online/Musician’s Friend because I’ve had decent experiences surprisingly enough. Even managed to get some OK customer service changing an order.

    But I concur with in-person GC being a terrible experience if you had to buy anything, because the sales staff (assuming you actually managed to get one to pay attention to you so you could check out, no small feat usually) seemed incentivized to behave like slimy used-car salesmen, trying to upsell you and add worthless add-on charges. I never bought anything from them without feeling like I had gotten ripped off – and wasted an hour of time as well dealing with their sales people.

    Leveraged buyout may have finally buried their coffin, but they’d been hammering nails into it for years.

  19. I live in the Twin Cities, MN and there are a dozen or more Mom & Pop retailers here even though there are 4 Guitar Centers in the metro area. I know we are a big music city but we can’t be that unique. Just search “synthesizer stores near me”, “musical instrument stores near me”, “guitar stores near me”.

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