24 Hour Fitness has filed for bankruptcy protection, marking the second national gym chain to go under since the erupted across the U.S. The bankruptcy comes one day after the company said it will close 100 locations nationwide.
24 Hour Fitness CEO Tony Ueber blamed the public health crisis, which has killed nearly 116,000 Americans, for the company's financial problems. "If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11," he said in a statement.
24 Hour Fitness said Monday it will combine a $250 million loan with cash generated from its locations to keep its remaining facilities open during the bankruptcy proceedings. Company officials expect to continue paying staff wages and benefits.
As the virus was spreading, state and local officials forced 24 Hour to temporarily close its locations on March 16. The company said it's now reopening its more than 400 locations in phases and expects most gyms to be ready for members within two weeks. Executives said they are closing the 100 locations permanently because they "were either out-of-date or in close proximity to other 24 Hour Fitness."
Court supervision is designed to help bankrupt companies shed debt, restructure their business and emerge from Chapter 11 as a more competitive company. "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," Ueber said.
Recent data show 722 companies sought bankruptcy protection around the U.S. last month, a 48% increase from the year-ago period. Chapter 11 filings also jumped in April and March, as states started imposing business restrictions amid the pandemic.
Gold's Gym, a 24 Hour Fitness competitor,for bankruptcy last month and said its 700 gyms will remain open while company officials restructure. Gold's permanently closed about 30 corporate locations during the pandemic.
Other 24 Hour competitors — including Blink Fitness, Crunch Fitness, LA Fitness and Life Time Fitness — have not filed for bankruptcy.