search

The Real Deal Logo

Trending

Lawmakers reach sweeping housing deal with “good cause eviction,” new 421aLawmakers reach sweeping housing deal with “good cause eviction,” new 421aTides’ original investors may be wiped out by preferred equity dealTides’ original investors may be wiped out by preferred equity dealDevelopers have a new tax break. Now they must figure it outDevelopers have a new tax break. Now they must figure it outGlossier founder is buyer of $22M Brooklyn townhouseGlossier founder is buyer of $22M Brooklyn townhouse
Commercial
New York

After failed FlyWheel deal, New York Sports Club considers bankruptcy

The gym chain’s owner is mulling filing for Chapter 11

Town Sports International CEO Patrick Walsh (Credit: JoJosh3131 and Ajay Suresh via Wikipedia)
Town Sports International CEO Patrick Walsh (Credit: JoJosh3131 and Ajay Suresh via Wikipedia)

New York Sports Club could soon be benched for good.

The gym chain’s owner, Town Sports International Holdings, is considering a potential Chapter 11 bankruptcy filing, according to Bloomberg. The chain has been in talks with lenders and advisors over a $200 million loan coming due in November.

The fitness chain had been hoping to pay down part of the loan by using financing from the acquisition of Flywheel Sports, an indoor cycling business. But those talks fell apart last week, Bloomberg reported.

Sign Up for the undefined Newsletter

Read more

Bankruptcy discussions for the chain haven’t come out of the blue. Town Sports — which operates gyms in New York, Boston, Philadelphia and Washington, D.C. — noted in its 2019 annual report that “substantial doubt exists as to our ability to continue as a going concern.” That was before the coronavirus pandemic led to government orders last month that gyms close.

Town shuttered 95 percent of its locations and borrowed $12.5 million from its revolving credit facility. It also became embroiled in legal battles with customers after Town continued to charge membership fees and allegedly made cancellation difficult despite its gym closures.

The company is far from alone when it comes to financial struggles. Neiman Marcus reportedly held discussions with lenders late last month about a potential bankruptcy loan. Earlier last month, Modell’s Sporting Goods was trying to stave off bankruptcy, though one source claimed the company was hoping another retailer would buy it following a Chapter 11 filing. In China, where the pandemic began, more than 100 real estate firms have filed for bankruptcy this year so far. [Bloomberg] — Erin Hudson

Tags
CoronavirusRetail