Bankrupt New York Sports Clubs Owner Seeks Early November Sale
(Bloomberg) -- The owner of the New York Sports Clubs and Lucille Roberts gyms is seeking to speed up a planned sale of its business in bankruptcy court as pandemic pressures mount in the fitness industry.
Town Sports International Holdings Inc. asked for court permission to shorten the timeline to sell itself to a group of investors or other interested parties, court papers show. Given gyms' cash constraints and liquidity needs during the pandemic, the company is seeking to complete the sale by early next month. Lenders have submitted an initial credit bid for around $80 million.
The fitness chain is still marketing its assets and has had “various levels of attendant discussions with nearly 50 potential bidders,” Christopher Wilson, an adviser to the company at Houlihan Lokey Inc., wrote in court papers.
The sale must be approved by U.S. Bankruptcy Judge Christopher Sontchi of Delaware. A hearing to approve bidding motions is scheduled for 1 p.m. Friday, with objections due the same day. Plans call for a Oct. 26 bid deadline and a sale hearing on Nov. 2.
Town Sports sought Chapter 11 bankruptcy protection in September, unable to keep up with debt payments after it was forced to shut its gyms for months to help stem the spread of Covid-19. The chain is seeking to close certain locations permanently, depending on the outcome of landlord talks, according to court papers.
Town Sports has been negotiating terms of financing that would help support the gyms through bankruptcy, and agreed to a debtor-in-possession loan from investors including Tacit Capital that considers a going-concern sale of the business.
The $80 million bidding floor from the Tacit-led group includes the $32 million DIP financing along with a credit bid for all the company's assets, court papers show. The deal doesn't include a breakup fee, according to Houlihan's Wilson.
The initial bid and formal approval of the sale procedures will “encourage competitive bidding” from other parties, and Town Sports and its advisers will review those offers up until the deadlines, Wilson said.
The case is Town Sports International LLC, 20-12168, U.S. Bankruptcy Court, District of Delaware. To view the docket on Bloomberg Law, click here.
©2020 Bloomberg L.P.
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