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With ABC Complete, Star Trac Focuses on AFP for 2011

With ABC Complete, Star Trac Focuses on AFP for 2011

IRVINE, CA -- After an eventful and sometimes difficult 2010, Star Trac kicked off the new year with some promise.

About 30 sales representatives were on hand earlier this month for a national sales meeting, the first of its kind at the Irvine, CA-based company in more than a year. (Regional meetings had been held instead.) It was a sign that Star Trac is plowing ahead with its business plan while attempting to manage some of its debt.

In November, Star Trac announced that it had entered into an Assignment for the Benefit of Creditors (ABC) in accordance with California law. The ABC was an alternative to a formal Chapter 11 or Chapter 7 bankruptcy. (It had been rumored for months that Star Trac would file for bankruptcy last year.) The company’s assets were transferred from its former parent company, Unisen Inc., to a new corporate entity, Core Industries Inc.

Star Trac says that since the ABC was pre-packaged and the restructuring of the company occurred on Nov. 19, no further action was needed from Core Industries Inc., other than looking after the interests of the creditors on behalf of the company.

“Our partners and customers have been very supportive and are moving forward with us as an important and valued business partner,” according to a statement from the company.

One of those business partners is Advantage Fitness Products (AFP), which entered into an agreement with Star Trac in December. AFP will provide the sales and service of Star Trac products in non-membership-based facilities, a move that signals more of an emphasis on Star Trac’s part in the hospitality and university sectors.

This is the first major partnership deal that Star Trac has announced since Land America Health and Fitness Co. owner Michael Bruno bought the company last July.

“We are looking to leverage the strengths of our distribution partners in the vertical (non-club) markets and our direct sales efforts with dues-paying clubs,” the company said. “Star Trac remains very focused on the fitness business and looks forward to continuing to serve our customers.”

AFP had been a partner with Precor for the past 10 years. Star Trac acknowledged that Larry Domingo, its executive vice president of sales, played an important role in orchestrating the AFP deal. Domingo had served as Precor’s vice president of sales before coming to Star Trac in 2009.

Some people in the industry, especially club operators who have purchased equipment from Star Trac, may have been concerned about Star Trac’s ABC agreement. Upon announcing the ABC, Star Trac said that it would honor all purchase orders at the terms of the original order and that there would be no lag time on new orders.

Bryan O’Rourke, CEO and principal with consulting company Integerus, says he and many others understand why Star Trac chose to enter into the ABC.

“The ABC situation really had nothing to do with the present management of Star Trac,” says O’Rourke, who met with Bruno in the fall but did not know about the ABC at that time. “If the ABC tactic had not been utilized, frankly, Michael Bruno would have had to do things that would have ultimately been far more damaging to creditors and employees of the company. Unfortunately, the prior management and ownership created the situation. Michael did the best he could given the circumstances. The pain is behind the company now with inventories being replenished and things starting to roll.”

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