24 Hour Fitness Worldwide Inc. sought court protection from its creditors, unable to keep up with debt payments after the COVID-19 pandemic shut down gyms nationwide.
Such a restructuring allows a company to keep operating while it works out a plan to pay its creditors and ease its debt load of $1.4 billion, plus lease obligations.
The fitness chain hasn’t had locations in Omaha since 2016.
The chain’s Chapter 11 petition was filed in Delaware. 24 Hour lined up $250 million in so-called debtor-in-possession financing backed by its creditors as it starts reopening locations across the country, according to a statement Monday. The majority of its gyms remain closed to try to stop the spread of the virus. The company isn’t charging members amid the shutdowns, taking its revenue down close to zero.
While some gyms start to reopen, it’s no guarantee that members will come flocking back, and cancellations could be even more devastating. Roughly 28 of 100 U.S. gym goers are expected to bail this year, according to trade group International Health, Racquet & Sportsclub Association.
Even before the onslaught of COVID-19, middle-tier operators like 24 Hour struggled with customer defections to higher-end or budget-friendly fitness options. The gym operator posted a 2% revenue decline in unaudited fourth-quarter earnings, Bloomberg reported in March.