24 Hour Fitness Gets Lifeline With Approval Of $ 250 Million Loan


[ad_1]

The bankruptcy of 24 Hour Fitness Worldwide Inc. has secured court approval for a $ 250 million post-bankruptcy loan, allowing the gym chain to maintain operations at least until the new year.

The debtor-in-operator loan, approved by Judge Karen B. Owens of the United States Bankruptcy Court for the District of Delaware on Friday, includes an agreement with its DIP lender, a group of pre-bankruptcy lenders, and a majority of its owners.

Under the deal, 24 Hour Fitness will begin paying its rent in full for its clubs open from July, gym attorney Ryan Preston Dahl de Weil, Gotshal & Manges LLP said during a virtual hearing on Friday. It will pay 30% of its rent to owners of facilities that the gymnasium intended to open, but which were closed by order of the state or local government.

The deal comes after a DIP approval hearing earlier this month continued when 24 Hour Fitness revealed that its facilities in several California counties had been closed following the pandemic.

The loan will be enough to keep the business in business until 2021, even if all of its clubs across the country are closed, Dahl said. The loss of $ 66 million from closures in California will be offset by about $ 85 million in operating cost savings, the gymnasium said in court on July 30. deposit.

Not all owners are required to abide by the agreement. A landlord may choose to opt out of this treatment and continue paying their rent in full, but 24 Hour Fitness will retain all of their rights to enforce defenses, including the landlord’s failure to provide access to their premises due to an impossibility or a case of force majeure.

Landlords can also negotiate with 24 Hour Fitness for further processing of their rent claims.

Owens on Friday also denied a request from a Houston-area landlord for permission to sue in state court to withdraw from his lease.

The judge said in a July 29 hearing that she would consider the owner’s claim if 24 Hour Fitness could not establish that the owner had “adequate protection” to get paid. The approval of the DIP loan was sufficient to secure payment of the rent in the future, Owens said.

The case is In re 24 Hour Fitness Worldwide, Inc., banker. D. Del., N ° 20-11558, hearing 07/31/20.

[ad_2]