After years of speculation, a GC bankruptcy could happen

[the mojo hobo]

The GC closest to me is in Fort Wayne Indiana, the home of Sweetwater. I'll bet they close that one. It's small and feels cramped.

[Psycho Bass Guy]

The worst part is that GC isn't suffering for its own bad retail business practices.  The interest payment it can't make is on leveraged debt forced on them by Bain Captial when it bought them out in 2007. They unloaded GC in 2014 on Ares Management. It's just like Toys R Us had a bad, but profitable business model until Bain leveraged them and killed them too. I don't see GC getting out of this without some serious outside capital.

[Pilgrim]

I don't know what outfits like Bain get out of buying companies, overloading them with debt, then shutting them down. They should be spelled "Bane" for their effect on business.

This is a destructive process that kills good companies. It's obviously putting money in someone's pocket, but it's a shitty thing to do.

[Dave W]

From the editor of Music Trades

Guitar Center's $2.0 Billion Education

[Pilgrim]

"Bain's ambitious plans to revamp the retailer with high margin private label brands, the elimination of negotiated sales, and improved inventory management were quickly derailed by the 2008 financial crisis."

Most of those sound like really bad ideas (inventory management is of course a good idea). Take over a company, and then stop doing the things that made the company successful....what could go wrong??

The result, according to the article: "Successful businesses thrive by delivering a desirable product or service at a compelling price and financial management exists to support the basic mission of serving the customer. For the past thirteen years Guitar Center's owners had this formula exactly backwards. In their world, the primary role of the retail operations was to meet outsized interest payments."

I'm not surprised. THis has happened again and again with this kind of buyout or acquisition.

[Dave W]

The actual Chapter 11 filing took place yesterday.

U.S. retailer Guitar Center files for bankruptcy