According to Bloomberg, the plan to save Gibson from bankruptcy was approved for a US Bankruptcy Court. The most important part of the is that Henry Juszkiewicz can no longer be the CEO and “the company can now exit bankruptcy under a new board of directors, a majority of whom will be guitar players.”
“The company won a judge’s approval on Tuesday to exit court oversight under the ownership of KKR and other lenders who fought a months-long legal battle for control of the 124-year-old music company.”
“If all goes according to plan, the reorganized company will debut in early November. [Nat] Zilkha, KKR’s head of alternative credit, will be one of the board members.”
“During restructuring talks, lenders, including KKR, pushed to remove Juszkiewicz as a condition for investing new funds. The company tried to either sell itself or recapitalize, but that effort failed and Gibson instead cut a deal with the lenders.”
“In bankruptcy, KKR had to fend off holdout creditors, including Blackstone Group LP’s GSO credit unit, who were pushing for a sale. KKR responded by insisting that unless it and all other senior lenders were paid in full, they intended to take ownership of Nashville-based Gibson and reorganize the company.”
“Last month, Gibson, KKR and GSO settled by tweaking the reorganization plan to increase recoveries for unsecured creditors. They could get as much as 10.8% of face value, double the maximum envisioned under earlier versions of the exit plan.”
In addition, Juszkiewicz and co-owner Dave Berryman will have their equity stakes canceled, and will both get a consulting agreement that bans them from making negative comments about Gibson for three years.
The U.S. Bankruptcy Judge Christopher Sontchi “overruled a last-minute objection to the company’s request to block most future lawsuits based on the company’s past performance, saying Gibson needed a fresh start.”