24 Hour Fitness Files for Bankruptcy, Closes over 130 Gyms amid Pandemic
24 Hour Fitness announced Monday that the company was filing for Chapter 11 bankruptcy after having to close more than 130 gym locations around the US amid the coronavirus pandemic.
One of the company’s officials, in a statement, said that they would not have decided to file for Chapter 11, were it not for COVID-19 and its devastating effects.
Once approved by the court, the company was expecting to secure roughly $250 million in debtor-in-possession (DIP) financing, which along with its cash from operations, would allow 24 Hour Fitness to continue operations and reopen its remaining clubs.
24 Hour Fitness, an industry leader for over 30 years, confirmed Sunday that it was permanently closing down more than 130 clubs.
The remaining 300 locations were expected to reopen by the end of June by state and local public health agency guidelines. The company also altered its club experience to include a new workout reservation system, touch-free club check-in, and stringent cleaning and social distancing protocols.
24 Hour Fitness was aiming to restructure its balance sheet and operations to ensure a resilient future. With this, the company would gain financial strength and flexibility to accelerate its business transformation plan, including reinvestment in their existing clubs, opening new clubs, and introducing several new innovative products and services that would enhance the fitness experience for its club members and guests for many years to come.
Financial services company Moody’s had already downgraded 24 Hour Fitness’ status in December 2019 before the onset of the pandemic, citing a sizable decline in membership count and an acceleration in comparable club revenue declines in the third quarter.
A dramatic shift in the US fitness industry could be expected even after coronavirus restrictions are lifted, as many Americans were now accustomed to at-home, online workout options since gyms remained shuttered for months under stay-at-home orders.