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.
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