New York Sports Clubs Owner Files for Bankruptcy Protection
The owner of the New York Sports Clubs chain sought court protection from its creditors, unable to keep up with debt payments after the shutdown caused by the coronavirus outbreak.
Town Sports International LLC filed a Chapter 11 bankruptcy petition in the District of Delaware. The move allows the company to keep operating while it works out a plan to pay creditors and turn the business around. It listed both estimated liabilities and assets of $500 million to $1 billion.
A number of gym chains were struggling with heavy debt loads even before the virus shuttered the global economy, and now the fitness industry is reeling from forced closures. Gold’s Gym International Inc.sought court protection from its creditors in May.24 Hour Fitness Worldwide Inc. filed for bankruptcy in June. New York and New Jersey recently allowed fitness centers tore-open, but at limited capacity and with customers and staff required to wear masks.
With a loan coming due in November, Town Sportswarned in March that there was substantial doubt about its survival. By April, the companywas weighing bankruptcy, Bloomberg reported.
The filing comes aftertalks collapsed over financing that would have helped the chain weather the Covid-19 pandemic.
Town Sports, which operates the New York, Boston, Philadelphia and Washington Sports Clubs, was previously looking for a financial reprieve through a deal to buy the indoor cycling studio business of Flywheel Sports, which was owned by Kennedy Lewis.
The company, which has around 600,000 members, wanted to use part of the financing from Flywheel’s owners to replace its loan due in November. But the earlier plans fell apart, and the loan has been trading for less than 16 cents on the dollar, according to Bloomberg data.
New York Sports Clubs began operations as a cluster of squash clubs in the 1970s before introducing exercise classes and expanding up and down the U.S. East Coast.
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