Gym chain seeks to restructure debt and optimize operations after pandemic-induced financial distress

A popular budget-friendly gym chain owned by Equinox Fitness, has filed for Chapter 11 bankruptcy.

The filing, made in the U.S. Bankruptcy Court for the District of Delaware, aims to restructure the company’s debt after financial difficulties stemming from the COVID-19 pandemic.

As part of the restructuring, Blink Fitness will close approximately 10% of its over 100 locations, with most closures affecting gyms outside the New York City metro area.

The fitness industry has never fully recovered from the pandemic’s impact.

According to the Health & Fitness Association, 25% of gyms in the United States were forced to close permanently due to the lockdowns and other restrictions.

Blink Fitness was no exception, suffering significant revenue losses during the pandemic when all its locations were temporarily shut down for nine months. The loss of membership revenue during this period created lasting financial challenges for the company.

In its bankruptcy filing, Blink Fitness cited “liquidity constraints” and a backlog of rent payments as significant factors contributing to its financial distress.

Additionally, the company has been struggling with underperforming locations, which have negatively affected profitability over the past year. The bankruptcy petition listed between $100 million and $500 million in both assets and liabilities, including $280 million in debt.

To maintain operations during the restructuring process, Blink Fitness secured $21 million in debtor-in-possession financing from its existing lenders.

CEO Guy Harkless emphasized that the Chapter 11 filing was a necessary step to optimize the company’s footprint and ensure its long-term success.

“After evaluating our options, the Board and management team determined that using the court-supervised process to optimize the Company’s footprint and effectuate a sale of the business is the best path forward for Blink and will help ensure Blink remains the destination for all people seeking an inclusive, community-focused gym,” Harkless said in a press release.

As part of the restructuring plan, Blink Fitness will close about 10% of its gyms, focusing on those that are non-core to its operations and primarily located outside of its core New York City market.

Despite these closures, Blink Fitness assured its members that their gym experience would not be impacted and that the company is taking steps to minimize the effect on employees and members.

In an email to members, the gym reiterated its commitment to continue operating as usual, prioritizing the needs of its members and communities.

Despite the financial challenges, Blink Fitness has seen positive momentum in recent years. The company reported a nearly 40% increase in revenue over the past two years, a sign of its resilience in the face of adversity.

Looking ahead, Blink Fitness remains focused on its strategic initiatives, including reinvigorating its most popular locations, enhancing member experience, and strengthening its community connections.

As Blink Fitness navigates the bankruptcy process, the company aims to emerge stronger and more resilient, continuing its mission to democratize fitness for all.