(Reuters) – Town Sports International Inc, the owner of New York Sports Clubs, filed for Chapter 11 bankruptcy on Monday and plans to sell itself, after the coronavirus pandemic forced its gyms to close and caused revenue to dry up.
Saying the pandemic “wreaked havoc” on its operations, Town Sports and 161 affiliates filed for protection with the U.S. Bankruptcy Court in Wilmington, Delaware.
As of March 31, Town Sports operated 185 fitness centers, including 99 New York Sports Clubs, with about 580,000 members.
The company’s brands also include gyms in Boston, Philadelphia and Washington, D.C. named for those cities, as well as Lucille Roberts and Total Woman Gym and Spa. Assets and liabilities totaled between $500 million and $1 billion.
Gym operators have suffered as the pandemic deprived them of the monthly membership and personal training fees that generate much of their revenue.
Gold’s Gym International Inc filed for bankruptcy protection in May, followed by 24 Hour Fitness Worldwide Inc in June.
In a court filing, Town Sports said two separate groups of its lenders have expressed interest in buying the Elmsford, New York-based company as a going concern and offering debtor-in-possession financing to help it restructure.
It said it preferred a proposal from Kennedy Lewis Investment Management, its largest secured debtholder, including the possible assumption of 94 leases, to a proposal from private equity firm Tacit Capital and other lenders involving fewer leases.
Town Sports was started as a small chain of squash clubs in New York City in 1973.
The company said it employed about 9,200 people, of whom 7,300 worked part-time, when it terminated all non-executive employees in March. It said it has reopened about 95 locations.
Reporting by Jonathan Stempel in New York, additionalreporting by Aakriti Bhalla in Bengaluru; Editing by Anil D’Silva and Hugh Lawson