24 Hour Fitness, a national chain of gym clubs, announced today it is filing for bankruptcy and will be “restructuring” the company due to stresses of the ongoing coronavirus pandemic. As a result, the company will permanently close more than 100 clubs, including their Morgan Hill location.
The company made the announcement in a June 15 statement on its website and social media.
“With the dramatic impact of the Covid-19 pandemic on the economy and the fitness industry, we are announcing a financial restructuring through a voluntary Chapter 11 filing that we expect will make us a stronger economy,” reads the statement.
“This process gives us the opportunity to reposition 24 Hour Fitness by eliminating debt and closing clubs that were either out-of-date or in close proximity with other 24 Hour Fitness clubs,” the company added.
The Morgan Hill location of 24 Hour Fitness is at 850 Tennant Station. The local gym and 12 other 24 Hour Fitness locations are on a list of clubs in the Bay Area that will be permanently closed due to the bankruptcy.
Other 24 Hour Fitness locations will be opening up throughout the month of June, reads the company’s June 15 statement. Members are reminded that their memberships are effective at all 24 Hour Fitness clubs that remain open through the end of 2020.
The San Ramon-based company has obtained promises of $250 million in “debtor-in-possession” financing that will allow 24 Hour Fitness to continue operating during the Chapter 11 process, reads the company’s press release.
“If it were not for Covid-19 and its devastating effects, we would not be filing for Chapter 11.
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,” said CEO Tony Ueber. “We expect to have substantial financing with a path to restructuring our balance sheet and operations to ensure a resilient future. The Covid-19 environment has proved that attention to health and fitness are more important now than ever before.”
The company’s statement adds that 24 Hour Fitness members will find a better experience at the clubs that reopen. “Removing these financial and operational constraints allows us to focus entirely on transforming our business and the club experience for the better. We will have the financial flexibility and resources to upgrade equipment and expand and improve our fitness offerings to best serve our members and continue our transformational journey,” reads the June 15 statement.
The company’s statement added that 24 Hour Fitness will continue to pay its employees’ wages, salaries and benefits during the bankruptcy process.