Guitar Center has begun to prepare for a potential bankruptcy filing that could come as soon as next month, the New York Times reported. The retailer missed an interest payment of roughly $45 million earlier this month, setting off a 30-day grace period that could end in default. The country’s largest retailer of musical instruments has reached out to creditors to discuss a plan that would involve the company filing for bankruptcy this year and emerging from it in early 2021. It’s still possible that Guitar Center could avert bankruptcy, as it did earlier this year when it resolved a skipped interest payment in April with a distressed debt exchange. That led to a downgrade by the credit ratings agency Moody’s in May, which noted that the transaction did not “fundamentally change” the company’s “untenable” capital structure. It was the third cut in the company’s credit rating this year.
