Town Sports International Holdings, the bankrupt owner of New York Sports Clubs, has reportedly worked out a takeover deal that will keep its gyms open.
The company outlined plans for the deal — struck with private-equity firm Tacit Capital and various lenders — at a bankruptcy hearing Wednesday, according to the Wall Street Journal.
The deal would allow the lenders to lead bidding for the company’s assets, known as a “stalking horse” bid. According to the Journal, the offer would consist of no more than $85 million worth of debt forgiveness, establishing a minimum price for the auction.
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The offer was chosen over a separate one from lender Kennedy Lewis Investment Management.
Town Sports, which filed for bankruptcy Monday, has struggled with mounting debts since the pandemic hit. In April, New York Attorney General Letitia James ordered the company to reimburse members for fees charged while the locations were closed, arguing that “New Yorkers have enough to worry about and should not be forced to pay for services NYSC is no longer providing.”
Nicole Greenblatt, a lawyer for Town Sports, said Wednesday that the company needed financial relief “so they can reopen the gyms with appropriate health and safety improvements, and comply with relevant consumer protection laws and obligations.”
The company intends to sell off its assets by the end of October and has until next week to commit to a plan for shopping them around.
Gov. Andrew Cuomo gave gyms the green light to reopen in August. Town Sports said it has since reopened 95 locations. [WSJ] — Sylvia Varnham O’Regan