YogaWorks, Santa Monica, California, filed for Chapter 11 restructuring on Oct. 14 and has permanently closed all its studios but will continue to offer digital and live-stream content, the company announced.
YogaWorks, which in addition to operating studios, also operates an international yoga instructor teaching school.
Under the direction of its existing management team, YogaWorks will continue offering its live-stream and on-demand digital platforms, YogaWorks Live and MyYogaWorks, as well as its teacher training and workshop departments.
As part of the Chapter 11 process, YogaWorks has entered into a purchase agreement with Serene Investment Management. Serene will serve as the stalking-horse bidder and has agreed to acquire the YogaWorks digital and education business and intellectual property.
YogaWorks expects to conduct an auction in which the Serene purchase agreement sets the floor for the auction, a process designed to achieve the best offer for the company, subject to approval by the court.
In connection with the Chapter 11 filing, Serene has also provided a commitment for debtor-in-possession financing that will offer enough liquidity to support YogaWorks through the reorganization, according to YogaWorks.
“After considering a number of alternatives to overcome the financial challenge of the studio closures, we determined that implementing an orderly restructuring process is in the best interest of all of our key stakeholders, most notably our dedicated teachers and passionate students,” Brian Cooper, CEO of YogaWorks, said in the announcement. “With the improved financial flexibility provided through this process, we will continue to build upon the strengths of our digital and educational platforms, both of which have proven to be successful and have experienced significant growth over the course of the past several months.”
The company does not expect any significant changes to employees’ day-to-day job responsibilities and expects that current employees will continue to be paid and receive benefits in the ordinary course of business.
The announcement pointed to the government-mandated temporary closures of its studios and other health clubs due to the COVID-19 pandemic and the social distancing requirements that restricted attendance at its studios even after reopening as the reasons for the permanent closure of its in-person studio locations around the country.
To adapt to these challenges, YogaWorks has expanded its digital platform that now offers its students more than 40 live-streaming yoga classes per day and more than 1,000 hours of pre-recorded classes and yoga workshops.
The company also transformed its teachers training and certification offering for students and teachers to a virtual environment creating new revenue opportunities for the company, according to Cooper.
“We are confident that we will emerge from this process a stronger organization,” Cooper said.
YogaWorks ranked No. 24 on Club Industry's Top 100 Health Clubs of 2019 list with $59.6 million in 2018 revenue.
The company had been traded as a public company on the Nasdaq stock exchange from August 2017 until July 2019 when its stocks were trading around 65 cents, causing the company to announce that it was delisting due to having few stockholders and little trading of its stocks.