Will Guitar Center actually fold?

Mark Wein

Mark Wein

Grand Poobah
Staff member
I'm curious about the short term. I ran across this article on HC this morning: http://thetoneking.com/wp/life-support-how-long-until-they-pull-the-plug-on-guitar-center/

IIRC they have a large debt payment due in April? Anyhow I'm curious what you guys have to say but I would like to keep the obvious political portion of this out of the thread regarding Bain/Romney etc. Bain is an important part of the story but I don't want the politics brought into it per forum rules. The comments in the story I linked to are interesting if any of it is true.
 
It seems like companies like Gibson and Fender would be severely impacted if GC were to go away.
 
No.... it's like any other big business bullshit... they'll file bankrupcy, the bigwig jackasses that made all kinds of money along the way will still be rolling in it... the ownership of the business will change hands while day to day business goes on as normal... and the vendors who are owed the money involved in the bankrupcy may get a dime back on the dollar.
 
Mark Wein said:
It seems like companies like Gibson and Fender would be severely impacted if GC were to go away.
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The market for those guitars wouldn't go away. There might be a temporary hiccup, but someone would step in and pick up the slack.
 
reverend1 said:
The market for those guitars wouldn't go away. There might be a temporary hiccup, but someone would step in and pick up the slack.
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Who would have that kind of throughput though? Especially in the brick and mortar world?
 
baimun said:
No.... it's like any other big business bullshit... they'll file bankruptcy, the bigwig jackasses that made all kinds of money along the way will still be rolling in it... the ownership of the business will change hands while day to day business goes on as normal... and the vendors who are owed the money involved in the bankruptcy may get a dime back on the dollar.
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That's not exactly how it works. The most like to not get paid would be the investors, and large creditors. Bankruptcy isn't a bad thing in and of itself. It allows you to get rid of bad contracts, unions, business arrangements that no longer make sense.

With out chapter 7 there would be no airlines.
 
Mark Wein said:
Who would have that kind of throughput though? Especially in the brick and mortar world?
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Someone would step up, there is too much money to be made. You could even see Fender or Gibson setting up their own stores and selling direct to the consumer. That would significantly increase their margins. But more than likely a difference venture capital company would assume the assets of GC.
 
If I recall correctly, a few years ago Gibson discontinued dealerships for many small vendors. If GC were to fold, I wonder if they would come, tail between their legs, asking those dealers to come back. :embarrassed:
 
Bankruptcy and liquidation of assets is one scenario.

Reorganization and renegotiation of terms with creditors is another. Some amount of sell-off would probably come with that.

Quite frankly, my sympathy meter for some of the manufacturers getting shafted is not registering anything. Maybe it's mis-calibrated.
 
Gary Blanchard said:
If I recall correctly, a few years ago Gibson discontinued dealerships for many small vendors. If GC were to fold, I wonder if they would come, tail between their legs, asking those dealers to come back. :embarrassed:
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Gibson didn't discontinue them. The set minimum inventory levels, and minimum sales volumes that smaller stores either couldn't or wouldn't do.
 
reverend1 said:
Someone would step up, there is too much money to be made. You could even see Fender or Gibson setting up their own stores and selling direct to the consumer. That would significantly increase their margins. But more than likely a difference venture capital company would assume the assets of GC.
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I dunno, i still have yet to see twinkies on the shelf. :grin:
 
reverend1 said:
Gibson didn't discontinue them. The set minimum inventory levels, and minimum sales volumes that smaller stores either couldn't or wouldn't do.
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Kinda the same difference. The banjo players were ready to revolt when that happened.

But then, most people think banjo players are revolting. :grin:
 
They won't go under. They may however declare bankruptcy and that would fuck the major manufacturers out of millions, possibly causing a chain reaction.

Oh well.
 
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