Fitness chain 24 Hour Fitness is looking at a possible bankruptcy due to the coronavirus, as well as mounting debt concerns and the fact that every single one of its 448 locations has closed down, according to CNBC.
24 Hour Fitness, which has said it plans to suspend membership payments if it is unable to open its locations, faces hundreds of thousands of dollars in debt set to spring maturity by 2022 if it remains outstanding.
But CNBC reported that people close to the situation said a bankruptcy isn’t a sure thing and could be avoided.
24 Hour Fitness is owned by AEA Investors, which bought it for $1.8 billion in a deal with Fitness Capital Partners and Ontario Teachers’ Pension Plan in 2014. The company, based in San Ramon, California, had around $1.5 billion in sales last year, with less than $1 million in cash.
Some gyms and fitness locations have offered at-home options, although it’s unclear whether that will be enough to bolster earnings until social distancing restrictions are lifted — whenever that might be.
Fitness companies in general have had a rough go of it for the past few weeks and could have an even worse time moving forward as continuing unemployment could mean more people wanting to avoid costly membership fees and others feeling uncomfortable being in crowded places for the time being.
Some health officials have cautioned that spaces like bars and gyms, when allowed to reopen, will have to be limited in use to avoid contamination from popular, shared surfaces.
But lobbyists for the industry are pushing for more rent relief and financial aid, and the President Donald Trump administration has signaled that gyms could be among the first places allowed to reopen. Some have criticized the idea of opening gyms before schools, however.
When they do reopen, gyms would come back in a “three-phase plan” and would have to adhere to new, stringent cleanliness standards.