Gibson, the guitar maker behind some of the world's best-known rock music, has filed for bankruptcy in the US after being weighed down by $500m (£365m) in debt.
The Nashville-based company has for decades produced the guitars under brands such as Les Paul and SG favoured by the likes of Elvis Presley, Bob Marley, Jimmy Page and Slash.
It has been brought down by debt linked to the acquisition of its overseas consumer electronics business, where sales have been in sharp decline. This division will now be wound down under plans which will allow the core guitar-making and audio business to continue.
Details were set out in a filing in a US bankruptcy court in Delaware on Tuesday.
The company plans to exit the "chapter 11" bankruptcy arrangement in September and has secured $135m in financing to fund operations during this period.
Lenders including Silver Point Capital, Melody Capital Partners and funds affiliated with KKR Credit Advisors will swap debt for equity ownership in the reorganised company.
Chief executive Henry Juszkiewicz said: "This process will be virtually invisible to customers, all of whom can continue to rely on Gibson to provide unparalleled products and customer service."
Gibson, founded in 1894, has over the years become associated with musical pioneers from Robert Johnson and BB King through to David Bowie and its guitars are associated with some memorable moments in rock history.
Eric Clapton is said to have played the solo on the Beatles' "While My Guitar Gently Weeps" on a Gibson guitar borrowed from George Harrison.
The remains of a Les Paul Gold Top Deluxe smashed on stage by The Who's Pete Townshend can be seen at London's Victoria & Albert museum.
Gibson sells more than 170,000 guitars a year in more than 80 countries and has the top market share in premium electric guitars.
Its instruments range in price from $799 to more than $20,000 for top-of-the-range custom made models.
The company said sales of electric guitars climbed by 10.5% to $122m in the year to January.
Gibson bought its Hong Kong-based consumer electronics arm from Philips in 2014.
It started to wind down the business - including liquidation proceedings in Hong Kong, the UK and six European countries - on Monday, according to court papers.
Nashville guitar expert George Gruhn said: "The brand name and company's reputation for making guitars is tarnished, but not dead by any means, and it's very much capable of being resuscitated."