Various reports last month indicated that big box music retailer Guitar Center was preparing for a possible bankruptcy filing as a result of massive losses in income and declining consumer spending habits due to the COVID-19 pandemic. According to sources close to the matter, Guitar Center has been reaching out to creditors to try and work out a payment plan to repay its $1.3 billion in debt. A press release circulated on Tuesday detail Guitar Center’s efforts to restructure its massive debt with its key stakeholders, as the company has officially filed for Chapter 11 bankruptcy protection.

The company has successfully raised $165 million in new equity investments from Guitar Center’s majority owner, Ares Management Corporation, alongside new investor Brigade Capital Management, a fund managed by The Carlyle Group, and other lenders. The instrument retailer will also look to reduce its $1.3 billion debt by raising $335 million in new senior secured notes (a type of bond that takes precedent over other debts in the event that a company declares bankruptcy and is forced into liquidation).

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Guitar Center CEO Ron Japinga added in a statement,

Today we announced a very important and positive step forward to ensure the long-term financial strength of Guitar Center. This agreement will allow us to significantly reduce our debt and reinvest in our business in order to better serve our customers and deliver on our mission of putting more music in the world. With ten consecutive quarters of growth prior to the impact from COVID-19, we have been pleased with our resilient financial performance during these challenging times created by the pandemic. As a result of this financial restructuring process, we will be better equipped to execute on and invest in our strategic growth initiatives and we will continue delivering through the strength of our brands, availability of our stores, customer-focused associate relationships, innovative music education programs and our expanding digital solutions.

Guitar Center expects that its new restructuring support agreement will be complete by the end of 2020, during which the company will keep operating its stores, websites, call centers, and social media pages in hopes of bringing in substantial end-of-year earnings during the busy holiday spending season in November and December. Guitar Center currently operates 300 stores (in addition to Music & Arts stores) across the country.

Fans can read Guitar Center’s entire press announcement regarding Tuesday’s Chapter 11 bankruptcy filing here.

[H/T Billboard]