Gym chain 24 Hour Fitness files for bankruptcy due to the effects of the coronavirus pandemic. It will remain operating during the process.
The company filed for Chapter 11 bankruptcy but it will reopen most of its locations as they complete the filing.
24 Hour Fitness announced that it will receive funds worth of $250 million as aid in the restructuring of its operations.
The San Ramon, California gym filed at the U.S. Bankruptcy Court for the District of Delaware. The company explained that the company's struggles were brought by business closure and stay-at-home orders imposed to curb the spread of the coronavirus.
“If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11," Chief Executive Officer Tony Ueber said in a statement. "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."
24 Hour Fitness runs over 430 clubs across the US. The company will reopen several of its clubs by the end of June. Regardless of membership level, members can enjoy access to any club through the end of the yea, the company says.
Ueber also said some new clubs may be opened.
“The COVID-19 environment has proved that attention to health and fitness are more important now than ever before," he said.
"As a result of this restructuring, we will gain financial strength and flexibility to accelerate our business transformation plan, which includes reinvestment in our existing clubs, opening new clubs and introducing several new innovative products and services that will enhance the fitness experience for our club members and guests for many years to come.”
Companies that filed for bankruptcy
The coronavirus pandemic has hit many companies and brands, and it led to bankruptcy filings.
One of these companies is Neiman Marcus. The luxury department store chain sought Chapter 11 reorganization in US Bankruptcy Court in Houston. It was able to secure $675 million in financing to carry on with its reorganization.
“Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” Geoffroy van Raemdonck, chairman and CEO of Neiman Marcus Group, said in a statement.
The major retailer runs 43 Neiman Marcus stores, 22 Last Call stores, and two Bergdorf Goodman stores. These establishments accumulated nearly $5 billion in debt. This also happened due to two leveraged buyouts in less than 10 years.
Meanwhile, J.Crew bankruptcy came after retailers like Pier 1 Imports, Modell’s Sporting Goods and True Religion closed down.
“This agreement with our lenders represents a critical milestone in the ongoing process to transform our business with the goal of driving long-term, sustainable growth for J.Crew and further enhancing Madewell’s growth momentum,” chief executive Jan Singer said in a statement, referencing its smaller, but more successful, brand.
Clothing retailer Forever 21 has filed for Chapter 11 bankruptcy protection in the US and plans to close down up 178 stores in the US.
Following the bankruptcy filing, Forever 21 released a statement saying that it plans to “exit most international locations in Asia and Europe” but it will continue operations in Mexico and Latin America following. According to a company spokesperson, the fashion retailer expects to close up to 350 stores globally, including up to 178 stores in the US.
