24 Hour Fitness files for bankruptcy, closes over 130 gyms amid coronavirus pandemic
24 Hour Fitness announced on Monday that the company would file for bankruptcy after closing more than 130 gyms across the country amid the coronavirus pandemic.
"Without COVID-19 and its devastating effects, we would not have submitted for Chapter 11. Against this background, we intend to use the process to strengthen the future of 24-hour fitness for our team and club members as our stakeholders as well" CEO Tony Ueber said in a statement.
Following legal approval, the company expects to receive approximately $ 250 million in DIP (debtor-in-possession) financing, which will enable it to continue operating and operating 24/7 along with the cash-from-operations to reopen the remaining clubs.
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24 Hour Fitness, an industry leader for more than 30 years, said on Sunday that more than 130 clubs will be permanently closed.
The remaining approximately 300 locations are expected to reopen at the end of June in accordance with the guidelines of the state and local health authorities. The company has also changed its club experience to include a new training reservation system, contactless club check-in, and strict cleaning and social distance protocols.
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"We expect substantial funding with a way to restructure our balance sheet and operations to ensure a robust future," continued Ueber. "The COVID-19 environment has proven that attention to health and fitness is more important than ever."
"This restructuring will give us financial strength and flexibility to accelerate our business transformation plan, which includes reinvesting in our existing clubs, opening new clubs, and introducing several new innovative products and services that improve the fitness experience for our club." Members and guests for many years. "
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Financial services company Moody's downgraded its 24-hour fitness status in December 2019 before the pandemic broke out.
Experts expect a dramatic change in the U.S. fitness industry, even after the coronavirus restrictions were lifted, as many Americans have become accustomed to online exercise options at home as gyms have been closed for months due to home orders.
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A Harrison Co. consumer survey conducted in April 2020 among approximately 1,000 fitness club users found that $ 10 billion annually could leave the fitness club sector, much of it for home fitness options, reflecting changing consumer sentiment about safety and cleanliness reflected by health clubs.
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"The difficult economic conditions currently facing gyms and health clubs will not go away after the crisis ends," said Paul Byrne, partner at Harrison Co, in a statement. "Once the home stay guidelines are lifted, consumers will continue to do so." train at home in numbers that go far beyond what we saw before the crisis. "
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