The 24 Hour Fitness chain today announced that it has filed for Chapter 11 bankruptcy relief due to the “disproportionate impact” of the COVID-19 pandemic.
The Chapter 11 petition, filed in U.S. Bankruptcy Court for the District of Delaware, will give the company time to work out a plan to repay its creditors and deal with lease obligations.
The club at 150 Hana Highway in Kahului, Maui, however is among the more than 130 clubs that have been shuttered permanently across the nation.
“If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11,” said Chief Executive Officer Tony Ueber in a news release. “With that said, we intend to use the process to strengthen the future of 24 Hour Fitness for our team and club members, as well as our stakeholders.”
In conjunction with the Chapter 11 filing, the San Ramon, Calif.-based company said it expects to secure about $250 million in debtor-in-possession financing, which would allow it to continue operations and reopen clubs without interruption.
Six other 24 Hour Fitness locations on Oahu are expected to reopen Friday, when gyms, along with spas, yoga, barre and dance studios have been given the green light by Gov. David Ige to do so.
The company plans to reopen clubs in phases, with most of them open by the end of this month.
As part of the bankruptcy filing, the company has asked the court for authorization to continue paying team members’ wages, salaries and benefits, and to continue its various member programs.
Lazard is acting as financial advisor, FTI Consulting is acting as restructuring advisor and Weil, Gotshal & Manges LLP as the company’s legal counsel for the Chapter 11 filing.