Bally Total Fitness Files Again for Bankruptcy
December 3, 2008, 3:46 pm Link to This
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Topics LegalIndustries Retail/Leisure
Bally Total Fitness, the gym operator controlled by the hedge fund Harbinger Capital Partners, filed for bankruptcy protection on Wednesday for the second time in less than two years, hindered by debt and limited refinancing options amid the credit crunch.
Bally plans to use existing cash reserves to continue operating. The company, which again filed in the Federal Bankruptcy Court for the Southern District of New York, plans to sell itself or reorganize during the Chapter 11 proceedings, The Associated Press reported.
Bally’s chief executive, Michael Sheehan, who replaced Paul Toback in June, said Bally’s long-term debt and lack of refinancing options left limited alternatives, despite continuing efforts to cut expenses and streamline operations.
According to CapitalIQ, Bally’s has total debt of $811.3 million and cash and short-term investments of $70.8 million. Total assets are listed as $411.4 million.
‘’The burden of Bally’s long-term indebtedness, coupled with the lack of refinancing options in today’s constrained credit markets, have limited our ability to restructure using out-of-court vehicles, leaving Bally with no alternative other than the actions announced today,'’ Mr. Sheehan said in a statement.
Bally first headed into bankruptcy early last year after it defaulted on its debt of more than $800 million. Bally then filed for a Chapter 11 prepackaged bankruptcy plan that helped simplify the process.
Harbinger’s Master Fund and its Capital Partners Special Situations Fund invested about $233.6 million in exchange for Bally’s common equity. Bally emerged in the fall of 2007 as a private company.
Unlike last year, Bally is not filing with a prepackaged bankruptcy plan, which would have helped shorten and streamline the process. Still, Bally said it hoped to emerge from bankruptcy ‘’as promptly as possible.'’
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