Following months of speculation over its financial problems, world renowned guitar manufacturer Gibson today filed for bankruptcy, casting uncertainty over the continued operations of its consumer electronics division Gibson Innovations, the inheritor business of Philips Audio, the inventor of products such as the music cassette and audio CD.

In a bid to diversify its guitar-based business operations into the wider lifestyle electronics market, Gibson acquired Philips’ audio and home entertainment division in 2014 for around $135 million, which it subsequently reconstituted as part of ‘Gibson Innovations’. Under the acquisition agreement it has continued to market electronic and audio goods using the well known Philips brand.

However, with debts of up to $500 million, Gibson Brands (the parent company of the famous guitar maker) today announced that it had reached an agreement with those holding up to 69% of its debts, which means that it will now “wind down” Gibson Innovations, and return to its core musical instruments business.

“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”, said Henry Juszkiewicz CEO of Gibson Brands in a statement regarding today’s formal bankruptcy petition.

A representative of Gibson was unwilling to comment on the exact details of the restructuring plan, and what it means for the future of Gibson Innovations, which has approximately 90 employees at its Strijp S office in Eindhoven. However they reiterated that under the bankruptcy agreement, business operations will continue as usual in the immediate term until the restructuring plan is finalised. Whether that means an eventual shut down of its Netherlands based electronics operations, or a sale to another company, remains to be seen.