CLUB Town Sports International Holdings Inc

By Aisha Al-Muslim 

Town Sports International Holdings Inc., the parent company of New York Sports Clubs and Lucille Roberts gyms, has filed for bankruptcy after facing debt coming due this fall as well as reduced cash flow and liquidity due to coronavirus-related closures.

The publicly traded, New York-based gym chain, which operates about 190 locations, mainly in East Coast cities, filed for chapter 11 protection Monday in the U.S. Bankruptcy Court in Wilmington, Del.

The pandemic has been particularly challenging for the U.S. fitness industry, which has tried to safely reopen gyms in states and counties that allow it. Mandated shutdowns have pushed other fitness chains into bankruptcy, including 24 Hour Fitness Worldwide Inc. and Gold's Gym International Inc.

Town Sports had been trying to refinance a loan due in mid-November by working with prospective lenders. The company had failed to make certain payments on the loan due in August. The full loan, with $178 million remaining, is due Nov. 15.

The company owned and operated 185 fitness clubs under various brands as of March 31, including Philadelphia Sports Clubs, Boston Sports Clubs, Washington Sports Clubs, Palm Beach Sports Clubs, Around the Clock Fitness and Total Woman Gym + Spa. It employed about 9,200 people as of December, with roughly 1,900 working full time.

Town Sports was forced to close its gyms in March following state and local government orders aimed at slowing the spread of the coronavirus. The company closed eight clubs permanently during the second quarter and it expects to shut down more locations this quarter.

To offset expenses, Town Sports had terminated employees at clubs ordered to close and stopped its lease payments. It received a government-backed loan of more than $2.74 million under the Paycheck Protection Program in late April, according to securities filings.

Earlier this summer, Town Sports warned that it doubted it could stay in business within one year. The company said in June it was weighing filing for bankruptcy and it needed to raise up to about $80 million to fund the costs of a potential bankruptcy filing and to cover operating shortfalls.

WSJ Pro Bankruptcy reported in April that Town Sports had hired lawyers to explore a potential debt restructuring or bankruptcy filing. Earlier in April, the gym operator scrapped a deal to acquire Flywheel Sports Inc., a maker of home fitness bikes. Among conditions Town Sports had to meet to complete the deal was refinancing its debt.

Earlier this month, Town Sports said first-quarter revenue fell 16% from a year earlier to $98.1 million. The company had a loss of $136.3 million in the quarter, compared with a year-earlier loss of $2.1 million.

Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com

(END) Dow Jones Newswires

September 14, 2020 07:52 ET (11:52 GMT)

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