24 Hour Fitness prepares for potential bankruptcy

Gym chain is making plans even as it starts reopening process

TRD NATIONAL /
Jun.June 01, 2020 09:15 AM
24 Hour Fitness is preparing for a possible bankruptcy filing even as it begins reopening locations. (Getty)

24 Hour Fitness is preparing for a possible bankruptcy filing even as it begins reopening locations. (Getty)

Gym operator 24 Hour Fitness Worldwide planning for a potential bankruptcy even has it begins reopening its locations.

The fitness company, which has more than 430 mid-tier gyms, has been talking with investors about the terms of a loan that would keep the company afloat during a court restructuring process, according to Bloomberg. The possible Chapter 11 filing would cut the company’s borrowings by exchanging debt for equity and putting lenders in control. Investment bankers at Lazard and attorneys at Weil, Gotshal & Manges are advising 24 Hour Fitness on the process.

The company was struggling to hold onto customers even before the pandemic, with many flocking to gyms that were either more upscale or more affordable. It reported a 2 percent decline in revenue in its unaudited fourth-quarter earnings report, and membership dropped from 3.5 million to 3.4 million from the second to third quarter last year.

The fitness and health club industry could shrink from an $85 billion industry to a $45 billion industry this year amid mandated closures due to the pandemic, according to estimates from WinterGreen Research . About 45 percent of states have started letting clubs at least partially reopen, but this is not the case in some of the most populous states like New York and California. Clubs have so far reported around 30 to 50 percent of members returning.

New York Sports Club is also considering a Chapter 11 bankruptcy filing in the wake of its failed FlyWheel deal.

24 Hour Fitness has implemented new health and safety measures including a touch-free check-in service and 30-minute closures for cleanings throughout the day. [Bloomberg— Eddie Small


Related Articles

arrow_forward_ios
San Francisco Supervisor Dean Preston and San Francisco Apartment Association Executive Director Janan New

Real estate groups challenge San Fran’s permanent ban on coronavirus-related evictions

Real estate groups challenge San Fran’s permanent ban on coronavirus-related evictions
Malls are hemorrhaging retailers left and right. What will happen with all that space? Some could be converted into apartments and condominiums. (iStock)

Retail-to-residential conversions are in cards at America’s doomed malls

Retail-to-residential conversions are in cards at America’s doomed malls
Photo illustration of Gov. Andrew Cuomo, Judge C. Stephen Hackeling and Chief Justice Lawerence Marks (Getty, iStock)

Judge rules evictions guidance unconstitutional, moratorium invalid

Judge rules evictions guidance unconstitutional, moratorium invalid
Related chairman Stephen Ross and Related Companies Portfolio CEO Richard O’Toole withBronx Terminal Market and Time Warner Center (Getty, Google Maps, Wikipedia)

Related lays out $200M debt settlement plan for Tel Aviv bondholders

Related lays out $200M debt settlement plan for Tel Aviv bondholders
Inside a $1.8B new development odyssey

Inside a $1.8B new development odyssey

Inside a $1.8B new development odyssey
The 30-year fixed-rate mortgage averaged 3.07 percent for the week ending July 2 (iStock)

Mortgage rates hit all-time low

Mortgage rates hit all-time low
City Council members Debi (Deborah) Rose (right) and Brad Lander (Getty, iStock)

Council bill to reopen day care centers would be boost for landlords

Council bill to reopen day care centers would be boost for landlords
Governor Andrew Cuomo (Getty)

Desperate to open, gyms plan class action against Cuomo

Desperate to open, gyms plan class action against Cuomo
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...