Bally Total Fitness, which operates six clubs in Minnesota among its 347 nationwide, today announced that it has filed for Chapter 11 bankruptcy protection and declined to rule out closing facilities as a cost-saving measure.
The development is the latest indicating a downturn in the fitness club industry, which is struggling amid a troubled national economy. Last month, Life Time Fitness Inc. announced a 12 percent reduction in jobs (100 positions) at its headquarters in Chanhassen.
Chicago-based Bally said that while under bankruptcy protection it intends to significantly reduce its debt and either seek a buyer or pursue a business reorganization.
"Bally has received strong indications of interest from a number of prospective purchasers and is engaged in active and advanced negotiations with certain of its lenders regarding an agreement to purchase the company's assets as a going concern," the company said in a statement released this morning.
Last year, faced with more than $800 million in debt and just $45 million in cash, Bally defaulted on its debt, was delisted from the New York Stock Exchange and filed for Chapter 11. It emerged in the fall of 2007 as a private company.
Bally has two clubs in St. Paul, and one each in Fridley, Little Canada, Richfield and St. Louis Park.
The company did not directly address this afternoon whether any of its clubs across the country are in peril of being closed.
"Evaluating real estate options is part of Bally's ongoing business process," said Larry Larsen, a corporate crisis communications company hired by Bally to handle inquiries about the bankruptcy filing. "The company will continue to look at opportunities to manage its portfolio while meeting customers' needs." "The Chapter 11 process provides the best means for Bally to emerge a stronger, healthier company," said CEO Michael Sheehan. "With the opportunity to restructure our balance sheet and significantly reduce our indebtedness, Bally will have the ability to invest in our clubs and fund future expansion."
