New York State Attorney General Eric Schneiderman is suing the parent company of DavidBartonGym for failing to refund more than 5,000 members for prepaid memberships and services that went undelivered after the company suddenly closed eight clubs in December and then filed for Chapter 7 bankruptcy.
Club Ventures Investments LLC closed its four DavidBartonGym clubs in New York and four others in Boston, Chicago, Miami and Bellevue, Washington on Dec. 21 citing "severe competitive pressures," according to the announcement about the closings. On Dec. 23, it filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court in the Southern District of New York.
“As alleged in our complaint, David Barton Gyms acted irresponsibly and left their members without any recourse to recover lost payments, causing some to lose thousands of dollars,” Schneiderman said in a statement. “Health clubs must own up to their responsibilities to their members. They cannot be open one day and closed the next without proper notice to their membership, and must provide refunds for services not provided.”
One former DavidBartonGym client is out thousands of dollars, the New York State Supreme Court lawsuit alleges, after he prepaid more than $15,000 in membership and training services months before the chain’s closure.
The Attorney General’s office is seeking full restitution and an accounting to determine to whom the health clubs owe money. The office will closely monitor the bankruptcy proceedings and take whatever actions are warranted to protect the interests of the consumers, according to the release.
The suit argues that Club Ventures executives were “well aware that the health clubs were in a financially precarious position,” yet they continued to solicit new memberships and service payments through early December.
Former members have been unable to retrieve personal belongings from the locked-out facilities, the suit says—an allegation that was corroborated by an anonymous club manager who spoke to Club Industry in December. Facility locks were changed without notice, the manager said, which even prevented employees from claiming personal effects.
David Barton opened DavidBartonGyms in 1992, and the brand became part of Club Ventures in 2004. Club Ventures filed to Chapter 11 bankruptcy in 2011, and Barton left the company in 2013.
In November, DavidBartonGym’s Limelight, New York, club was profiled in a Club Industry feature about health clubs housed inside historic buildings.