Town Sports International is working on a deal for the purchase of the company through debtor-in-possession financing, the company shared in a Sept. 16 bankruptcy hearing.
Town Sports agreed to make private-equity firm Tacit Capital and various lenders its lead bidder for the company at no more than $85 million worth of debt forgiveness.
Town Sports owns and operates brands such as New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs, Lucille Roberts and Total Woman.
The company filed for Chapter 11 restructuring on Sept. 14 in the U.S. Bankruptcy Court in Delaware.
An $80 million debtor-in-possession facility from Kennedy Lewis Investment Management LLC (KLIM) was not accepted. KLIM owns more than 45 percent of the total amount of debt owed by Town Sports under the Prepetition Credit Agreement, making it the largest individual holder of prepetition secured debt.
KLIM owned cycling studio Flywheel, which filed for Chapter 7 bankruptcy on Sept. 14 and has now closed all of its 42 studios.