24 Hour Fitness Worldwide filed for Chapter 11 bankruptcy protection as the fitness chain was unable to keep up with debt payments as the coronavirus outbreak led to a rise in membership cancelations and gym closures.
The chain had to close all its gyms in the middle of March as it adhered to strict lockdown measures meant to contain the spread of the virus. The company fully drew its $120 million credit line to cope with the expected impact of the pandemic, according to Bloomberg.
24 Hour Fitness, Bloomberg said, had $1.3 billion in debt since its leveraged buyout in 2014.
In a press release Monday, 24 Hour Fitness said it expects to secure about $250 million in debtor-in-possession financing, which would allow the company to continue operations, including club reopenings.
24 Hour Fitness said it expects to reopen the majority of its footprint by the end of June.
"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 in a statement.
"We expect to have substantial financing with a path to restructuring our balance sheet and operations to ensure a resilient future,” the CEO added.
Privately held 24 Hour Fitness has more than 430 clubs and is based in San Ramon, California.