Gyms Have Been Hammered by the Shutdown
One industry devastated by the coronavirus pandemic has been gyms. Most states have closed gyms as non-essential businesses, and some of the country’s largest chains have not had the cash to survive such a long shutdown. They have begun to look at their options, which for some chains has included filing for bankruptcy. Although many states are opening back up, it has come too late for one nationwide chain.
South Florida Business Journal is reporting that 24 Hour Fitness is the latest gym chain to file for Chapter 11 bankruptcy protection. Although a Chapter 11 allows a debtor to continue to stay open as it reorganizes its debts, the chain has reported that it will permanently close some Florida fitness clubs.
COVID-19 to Blame
The company’s CEO has reported that the company would not be filing for bankruptcy if not for the coronavirus pandemic. With luck, filing for Chapter 11 will allow the company to pare back on its debt and emerge in stronger shape. Businesses are allowed to continue to operate while working their way through Chapter 11 and can even take on new financing.
For some time now, 24 Hour Fitness has been trying to renegotiate lease terms for many of its gyms. The company reports that it has received commitments for $250 million in financing, which should help it through the Chapter 11 process.
Unfortunately, six 24 Hour Fitness gyms in South Florida will be shutting down for good. These include locations in Miami’s Coconut Grove and in Kendall, among other locations. These closures leave only eight 24 Hour Fitness locations in the South Florida area. The chain has permanently closed around 100 gyms around the nation.
Is This Industry Struggling?
24 Hour Fitness was not the first gym to file for bankruptcy protection due to COVID-19. Golds Gym also filed for Chapter 11 protection back in early May. The company had earlier closed about 30 gyms across the nation as it struggled to find solid financial footing. They are also expected to emerge from bankruptcy within a year or so.
Apart from the recent pandemic, this is an industry that is undergoing some turmoil. Traditionally, gyms have relied on monthly subscriptions and initiation fees, but newer business models have entered the scene that are more attractive to cost-conscious gym bunnies. At the same time, higher-end gyms like Orangetheory Fitness have begun to peel off customers from chains like 24 Hour Fitness. As South Florida Business Journal reported, 24 Hour Fitness had experienced declining membership even before the COVID-19 pandemic hit, so these permanent closures are not surprising.
We Represent Business Owners in Bankruptcy Proceedings
The Plantation bankruptcy attorneys at Nowack & Olson, PLLC are committed to helping our business clients navigate the choppy waters caused by the ongoing pandemic and associated recession. If you need to discuss your options, please contact one of our lawyers today. You can reach us at 888-813-4737 or by sending us an online message. Our consultations are always confidential, so there is no risk to feeling out your options.