New York (CNN Business)Town Sports International, the owner of hundreds of gyms mostly on the US east coast, has filed for bankruptcy.
The 47-year-old company owns several gym chains, including New York Sports Club, Boston Sports Club and Lucille Roberts. A sharp drop in revenue during pandemic forced to it temporarily close its facilities for several months. The Chapter 11 filing is aimed at “substantially” reducing its debt load and “strengthen the company’s capital structure to support its ongoing operations,” according to a statement it posted for its members. Town Sports (CLUB) listed liabilities of $500 million to $1 billion in its filing. The company warned in June about a potential bankruptcy because the “scope and duration of the interruption to our operations has substantially reduced our cash flow.” To preserve cash, it laid off much of its 7,000-person workforce and stopped paying rent.Last week, it said in its most recent earnings report that a majority of its locations remained closed. “We anticipate that the Covid-19 pandemic will continue to negatively impact our operating results in future periods,” Town Sports said. Read MoreFor now, Town Sports said it won’t permanently close any of its nearly 200 gyms, which has about 605,000 members.Several gym chains have filed for bankruptcy in recent months, including Gold’s Gym and 24 Hour Fitness. Locations have begun to gradually reopen with capacity restrictions and safety measures. However, some people might be too nervous to rejoin, which has benefited Peloton (PTON). The at-home fitness company reported blockbuster earnings last week and several new products.