24 Hour Fitness Prepares for Potential Bankruptcy as Gyms Begin to Open
24 Hour Fitness has not been left behind in considering Chapter 11 bankruptcy in this Covid-19 Pandemic.
The company is a privately owned and operated fitness center chain headquartered in San Ramon, California. It is expected to close some gyms permanently and is reportedly preparing for a potential bankruptcy filing soon.
The company, which operates 430 gyms across the US, is seeking a loan to stay in business. 24 Hour Fitness could file for bankruptcy in the coming weeks.
The proposed Chapter 11 filing is to cut 24 Hour’s borrowings by swapping debt for equity and handing control to lenders. The company is getting advice from restructuring lawyers at Weil, Gotshal & Manges LLP, and investment bankers at Lazard as well. Plans are in flux and could change depending on future reopening and ongoing negotiations with creditors and 24 Hour’s landlords.
24 Hour Fitness has kept its position in the business for over 30 years and is facing $1.3 billion of debt from a 2014 leveraged buyout by AEA Investors and the Ontario Teachers’ Pension Plan.
In a statement, 24 Hour Fitness said that it is considering options to stay in business, but would not comment on the specifics. Currently, there are 24 Hour Fitness facilities in Alamo, San Ramon, Pleasanton, and Livermore.
Gyms stayed closed since March in California and Gov. Gavin Newsom was expected to guide reopening for fitness facilities soon.
24 Hour Fitness said that it has been rearranging equipment to ensure social distancing as gyms reopen and thoroughly cleaned clubs.