CHICAGO -- This must be bankruptcy emergence week in the club industry. A day after Crunch formally announced its emergence from bankruptcy, Bally Total Fitness, Chicago, announced its emergence today.
Bally’s reorganization plan was approved last month by the U.S. Bankruptcy Court, Southern District of New York. The company filed for bankruptcy in December 2008—its second Chapter 11 filing in 17 months. It emerged from its first bankruptcy in October 2007.
“Bally is moving in the right direction as we continue to systematically improve every aspect of this company,” Bally CEO Michael Sheehan said in a statement. “With the dramatic restructuring of our balance sheet and improved financial performance, Bally is now positioned to put 100 percent of our energy towards improving the customer experience and growing our business.”
In the reorganized Bally, JP Morgan Chase Bank and Anchorage Advisors LLC own a majority interest in Bally’s equity. JP Morgan received 50.5 percent of Bally’s equity, and Anchorage received 33.7 percent. The approved plan, which includes financing from Wells Fargo Foothill LLC and CIT Business Credit, will enable Bally to reduce its debt by approximately $700 million to less than $100 million.
Joining Sheehan and current board members Eugene I. Davis and Timothy J. Bernlohr on the board of directors of the reorganized Bally are Kevin J. Corgan and Michael Kerrane of JP Morgan, Daniel Allen and Aaron N. Rosenstein of Anchorage, and Fredric F. Brace, a retired executive with United Airlines.
“The unparalleled financial flexibility we have after emerging from bankruptcy will allow us to make the investments necessary to build Bally into the preeminent fitness chain in the country,” Sheehan said. “We have the right team in place and a strategy that will allow us to offer our customers the best experience in the industry.”