Gibson has been one of the world’s leading manufacturers of electric guitars for years. Throughout their century-plus of existence, countless musicians–from famous rock stars to local barroom heroes–have used Gibson guitars to create the soundtrack to our world. Now, after years of wrestling with declining sales and increasing loan debt, Gibson has filed for bankruptcy protection as part of a turnaround plan that shifts equity ownership stakes to noteholders in an effort to keep the company afloat.

As Bloomberg reports:

Support from senior secured noteholders will help Gibson repay bank loans while going through a “change of control” transaction, according to papers filed Tuesday with its Chapter 11 bankruptcy in Delaware. The petition shows the company owes as much as $500 million and that lenders will provide a new loan of up to $135 million to keep Gibson in business.

The change in control will give noteholders equity in a new company, replacing current stockholders such as Chief Executive Officer Henry Juszkiewicz. According to court filings, current noteholders include Silver Point Capital, Melody Capital Partners and funds affiliated with KKR Credit Advisors.

Various factors may be affecting the shrinking electric guitar market. Some feel it’s a result of a shift in the music zeitgeist away from guitar-driven music and toward more digitally-produced styles like EDM and hip-hop. Others speculate that the increased durability and decreased prices–while great for those looking to buy and sell used gear–have begun to cripple the company’s ability to sell new instruments.

Gibson representatives have noted that the company’s offshoot consumer electronics brand, Gibson Innovations, has been the main source of their recent financial downfall. Juszkiewicz purchased a line of Japanese consumer electronics in 2014 as part of a plan to rebrand and relaunch Gibson Guitars as a “music lifestyle” company. The move was intended to help the brand diversify and adapt to a changing market that had led to decreased sales. However, in addition to the largely negative reaction to the move from Gibson’s core customers–actual musicians–the purchases burned through capital and the saw lukewarm consumer response. This left the company with looming loan debts and not enough earnings to cover them. The restructuring will also allow the instrument business to “unburden” itself of this struggling portion of their business, which the company hopes will help them get back to their core musical instrument business.

“Over the past 12 months, we have made substantial strides through an operational restructuring,” said Mr. Juszkiewicz in a press release, “We have sold non-core brands, increased earnings, and reduced working capital demands. The decision to re-focus on our core business, Musical Instruments, combined with the significant support from our noteholders, we believe will assure the company’s long-term stability and financial health. … Importantly, this process will be virtually invisible to customers, all of whom can continue to rely on Gibson to provide unparalleled products and customer service.

As Bloomberg notes, “Juszkiewicz, who has found himself at odds with creditors in recent months, will continue with the company upon emergence from bankruptcy ‘to facilitate a smooth transition,’ according to the agreement. Court papers call for a one-year consulting deal and compensation package for Juszkiewicz.” There is no official word on whether or not he will remain with the company following the transition.

While filing for bankruptcy is hardly on any business’s bucket list, this restructuring deal seems to be a best-case scenario for Gibson’s customers. Not only will the company live on, but they’ll also get back to focusing on what they do best–making musical instruments.

[H/T Bloomberg]