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Guitar Center is filing for bankruptcy

November 22, 2020. Summarized by summa-bot.

August 8, 2014 - New York, NY, USA - Music lovers flock to the newly opened Guitar Center store in Times Square in New York on Friday, August 8, 2014. Sales of electric guitars have seen a drop of 36% since 2005. (?? Richard B. Levine) (Credit Image: ? Richard B. Levine/Levine Roberts/Newscom via ZUMA Press)

Guitar Center is filing for Chapter 11 bankruptcy, the latest company to go bankrupt during the pandemic that has decimated America's retail sector.

New York (CNN Business)Guitar Center is filing for Chapter 11 bankruptcy, the latest company to go bankrupt during the pandemic that has decimated America's retail sector.

Guitar Center has 269 locations, many of which are in malls that had been struggling long before Covid-19.

Foot traffic in malls has plummeted, and stores like Guitar Center that are dependent on people making discretionary purchases have been among the worst-hit this year.

The company said in its bankruptcy filing that it received up to $165 million in new equity investments and lenders agreed to reduce the company's debt by nearly $800 million.

The company's primary owner, Ares Management Corporation, as well as new equity investor Brigade Capital Management and a fund managed by The Carlyle Group will help finance Guitar Center through bankruptcy.

"This is an important and positive step in our process to significantly reduce our debt and enhance our ability to reinvest in our business to support long-term growth," Guitar Center CEO Ron Japinga said in a statement.

The company will continue to stay in business during the bankruptcy process.

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