BEAVERTON, Ore. — The nationwide gym chain 24 Hour Fitness has filed for bankruptcy and plans to close 134 locations in 14 states.
Filing for Chapter 11 bankruptcy will allow the company to secure about $250 million in debtor-in-possession financing, subject to court approval, according to its announcement on Monday. The company said that these funds, plus 24 Hour Fitness's cash from operations, will allow the company to continue to reopen clubs nationwide in accordance with local and public health agency guidelines.
“If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11," CEO Tony Ueber said in a statement. "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.”
Ueber said the company plans on restructuring to ensure a "resilient future."
The announcement comes just one month after Gold's Gym, another major workout chain, announced it would also be filing for bankruptcy because of coronavirus.
Nearly a third of the 134 gyms that are closing are located in California. Behind California's 42 closures, Texas has the second-most with 26 and Colorado has the third-most with 13 gym closures.
"As a result of this restructuring, we will gain financial strength and flexibility to accelerate our business transformation plan, which includes reinvestment in our existing clubs, opening new clubs and introducing several new innovative products and services that will enhance the fitness experience for our club members and guests for many years to come,” Ueber said.
Gyms have been one of the hardest hit industries since the coronavirus began to spread in the U.S. According to CNBC, 24 Hour Fitness announced back on March 16 it was closing all clubs for "an extended period of time" due to the coronavirus.