Gibson declare bankruptcy Protection under Chapter 11 of the U.S Bankruptsy Code this morning.
This follows months of speculation regarding the company’s financial woes with the failure of its 2015 model’s and electronics company. Gibson have also responded to the Tronical lawsuit by hitting with a counter lawsuit.
Gibson vs Tronical
As previously reported, Tronical, the company that developed automatic tuners for guitars, has sued Gibson for $50 million.
The guitar manufacturer has now hit back with a counter lawsuit, branding Tronical’s actions “a public relations stunt.”
Tronical’s previous statement.
“Tronical is claiming licensing fees to the amount of 23 million US dollars from the share in the profits agreed in the contract, and a further 27 million US dollars on the grounds of Gibson’s breach of contract of the exclusive research and development agreement with Tronical, which Gibson should have met by 2026.”
As reported, Gibson have now hit back. Their statement below.
“Gibson provided Tronical and CEO Chris Adams with more than $13.5 million in funding to create and develop auto tuners exclusively for Gibson. Despite the millions that Gibson previously paid Tronical and Mr. Adams, they have been unwilling or unable to account for the monies provided by Gibson, have failed to fulfill agreed-upon orders for products, and have failed to return money that was prepayment for goods never delivered.
“Instead of supplying the product or returning Gibson’s money, Tronical retaliated by filing its own lawsuit in Germany and is attempting to avoid appearing in the United States to address the merits of Gibson’s lawsuit.”
Gibson declare bankruptcy. What caused it?
As reported last month. Gibson were being sued by German company Tronical, for $50 million. On top of that, raids in 2011 and 2012 also costed the company nearly $800,000.
Including it’s failure of the 2015 Gibson guitar models. Gibson enquired electronic and home entertainment firms in Japan, to diversify the company.
Though Phillips, TEAC and Onkyo, the company went under the name of Gibson Innovators.
What does that mean?
As outlined in a statement.
“… [Gibson] and its U.S. subsidiaries today filed pre-negotiated reorganization cases under Chapter 11 of the U.S. Bankruptcy Code.
The filings will allow the Company’s Musical Instruments and Professional Audio businesses to continue to design, build, sell, and manufacture legendary Gibson and Epiphone guitars, as well as KRK and Cerwin Vega studio monitors and loud speakers, without interruption.”
This means Gibson can continue trading while rebuilding the company. This may not be the end for Gibson after all.
Bad company? Maybe bad boss
What will happen to CEO Henry Juszkiewicz? Juszkiewicz, who has been reported to be notorious for micromanagement and having a general band temper may no longer have a job in the upcoming months.
An email has been circulating with Juszkiewicz replying to an employee who had requested a day off around Thanksgiving.
You can read the email here.