On May 4, 2020, the fitness chain Gold’s Gym filed Chapter 11 Bankruptcy. This news comes after weeks of shutdown due to the coronavirus pandemic. Most gyms have been closed since March 17, 2020. Gold’s Gym has approximately 700 locations worldwide, and 98% of staff from company-owned gyms have been furloughed. Many of its locations are franchised, but the company is also permanently closing 30 company-owned locations in the bankruptcy.
Gold’s Gym CEO Adam Zeitsiff stated that the company went with Chapter 11 so the company could continue operating and franchising would not be affected. A Chapter 11 Bankruptcy is a reorganization bankruptcy often utilized by large companies that wish to remain in business. The other option businesses often use is Chapter 7. The company has to shut down and surrender its assets in a Chapter 7. Debts are liquidated and discharged in a Chapter 7 Bankruptcy, but the company pays its debts in an alternative arrangement in a Chapter 11.
The bankruptcy filing may come as a shock to some, as Gold’s Gym had set a company record in 2019 by opening 35 new locations. However, the company has declined to share all of its current financial information, only stating that its only present revenue is from licensed products and apparel.
The company expects to reemerge from the bankruptcy by August 2020. They will also need to comply with the phases of quarantine being lifted in each area it has locations. Some states have already allowed a soft gym reopening, but Gold’s Gym is waiting until May 8th to begin reopening its locations. The gym will have to comply with strict sanitation and social distancing guidelines if it wishes to open, and the costs may outweigh the income from reopening.
The fitness industry has been one of the hardest hit by the spread of COVID-19. Another large chain, 24 Hour Fitness, is rumored to be struggling financially too. Small gym and fitness studio owners that don’t have millions in the bank to rely on have to choose whether to take out CARES Act payroll protection loans or reduce their staffing costs. Gold’s Gym is likely the first of many gyms that will file bankruptcy as a result of the coronavirus pandemic.
If you are in a similar financial situation to Gold’s Gym because of the COVID-19 pandemic, you too may consider some form of debt relief to get back on your feet. An experienced bankruptcy attorney serving North Scottsdale can point you in the right direction if you are looking for help with a wage garnishment or trying to stop a foreclosure. Additionally, most offer free consults and are versed in Chapter 7, Chapter 11, and Chapter 13 bankruptcy. Also, look for a debt relief agent that offers Zero Down Bankruptcy or a File Now… Pay Later bankruptcy option. Call us in Scottsdale today to schedule a consultation with an experienced Scottsdale bankruptcy attorney.
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