Landlords Challenge Fitness First's Plan to Close Gyms and Slash Rents
Property giants are teaming up to challenge a plan by Fitness First's owner to close dozens of gyms and slash rents.
The Crown Estate, M&G Real Estate, and Land Securities are among the landlords who are planning to challenge the terms of the restructuring plan, which is set to be heard in court later this month.
The landlords are reportedly upset about the financial information they claim to have seen and the apparent repayment of a loan taken out by Fitness First under one of the government's COVID lending schemes.
They are also concerned about the depth of the financial information they have seen and the plan to single them out as a creditor class.
The plan would see ten of Fitness First's UK sites permanently close, and rent cuts affect many of the remaining 34 sites.
Hilton, Legal & General Investment Management, and Nuveen are also among the landlords who are involved in the challenge.
This is not the first time that landlords have challenged restructurings by retailers and restaurant chains during the pandemic.
The move is commonplace as landlords seek to avoid being financially compromised on a disproportionate basis.
Fitness First was bought by the Whelan family in 2016, and its latest filed accounts show a loss of more than £10m in the year to 31 March 2021.
However, its performance during that period was heavily impacted by the pandemic.
The bulk of Fitness First's operations are in London, with clubs in prominent locations such as Oxford Circus, Baker Street, and Liverpool Street.
The impact on jobs as a result of the prospective gym closures could not be ascertained.
The use of a restructuring plan rather than a company voluntary arrangement (CVA) to implement the latest overhaul could prove controversial among affected landlords.
Virgin Active, another gyms group, deployed a restructuring plan to force through a financial restructuring in 2021 as it teetered on the brink of collapse.
The mechanism allows companies to "cram down" creditors to force proposals through even if they vote against them.
The gyms industry
The landlords are reportedly upset about the financial information they claim to have seen and the apparent repayment of a loan taken out by Fitness First under one of the government's COVID lending schemes.
They are also concerned about the depth of the financial information they have seen and the plan to single them out as a creditor class.
The plan would see ten of Fitness First's UK sites permanently close, and rent cuts affect many of the remaining 34 sites.
Hilton, Legal & General Investment Management, and Nuveen are also among the landlords who are involved in the challenge.
This is not the first time that landlords have challenged restructurings by retailers and restaurant chains during the pandemic.
The move is commonplace as landlords seek to avoid being financially compromised on a disproportionate basis.
Fitness First was bought by the Whelan family in 2016, and its latest filed accounts show a loss of more than £10m in the year to 31 March 2021.
However, its performance during that period was heavily impacted by the pandemic.
The bulk of Fitness First's operations are in London, with clubs in prominent locations such as Oxford Circus, Baker Street, and Liverpool Street.
The impact on jobs as a result of the prospective gym closures could not be ascertained.
The use of a restructuring plan rather than a company voluntary arrangement (CVA) to implement the latest overhaul could prove controversial among affected landlords.
Virgin Active, another gyms group, deployed a restructuring plan to force through a financial restructuring in 2021 as it teetered on the brink of collapse.
The mechanism allows companies to "cram down" creditors to force proposals through even if they vote against them.
The gyms industry
