American Home Fitness files Ch. 11, Nellie’s files Ch. 7 as the economy continues to wreak havoc

A less-than-stellar high season for fitness followed by slower-than-normal summer doldrums due to continued economic stress has seen two more retailers enter the bankruptcy courts: American Home Fitness reorganizes, while Nellie's shuts and liquidates.
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A less-than-stellar high season for fitness followed by slower-than-normal summer doldrums due to continued economic stress has seen two more retailers enter the bankruptcy courts.

American Home Fitness reorganizes

American Home Fitness, based in Michigan, has filed for Chapter 11 bankruptcy reorganization, listing 11 of its 20 largest unsecured creditors as fitness suppliers.

In the court documents, filed July 2, Precor is shown as being owed the largest debt at $1.1 million, with the second largest debt to the fitness sector to Diamondback for a far lower total of $30,870.

“It’s a tough situation that we had to deal with,” founder and board member Scott Egbert told SNEWS®. “And we’re dealing with it. We’ll be in and out quickly.”

Two of the 15 stores the company had at the end of 2008 have already closed, and Egbert forecast that another four would close, leaving American Home Fitness (www.americanhomefitness.com) with nine in Michigan and Ohio. He added that although Michigan has seen difficult economic times, not all parts of the state are in dire straits.

In a hearing July 7, the U.S. Bankruptcy Court, Eastern District of Michigan, approved the interim use by the debtor of cash collateral to continue operations and scheduled a hearing Aug. 4.



Egbert, with American Home Fitness operator Eric Swanson, noted in a submission of their July 2 board meeting minutes to the court that “it is desirable and in the best interest of the company that the company commence a Chapter 11 bankruptcy case.”

Other companies founded by Egbert have downsized to accommodate the economic shifts. Chicago Home Fitness has closed another since the first of the year and is now at 23; North Star (Minnesota) has closed another, leaving seven stores; Northern Home (Wisconsin) has closed one and is at three; Precor Home Fitness in the Seattle, Wash., area remains at five; and Utah Home Fitness is holding at three stores.



Nellie’s bids adieu in liquidation


After 32 years in business, David Delgadillo shut down his remaining two stores in Corona and San Bernardino, Calif., putting an end to the business. His Torrance location had already closed, as had others in the Nellie's chain owned by Delgadillo, including Fitness Select, owned by another but run in a buying partnership with Nellie’s (www.nellies.com). The Diamond Bar store, owned by Moo Lim, remains open.

Delgadillo was not available for comment.

The court documents filed June 22, 2009, with the U.S. Bankruptcy Court, Central District of California, showed only four unsecured creditors in the fitness industry, all with debts from 2007 or 2008: Nautilus was owed $90,128 from 2007; Landice, $41,247 (2008); Octane Fitness, $38,716 (2008); and Vectra Fitness, $10,316 (2008).

Delgadillo and his wife and business partner, Sandra, had not paid themselves wages since February, the court documents revealed.

As of July 8, the Nellie’s website remained live, noting in the outdated About Us section that it was the first fitness equipment store in the Los Angeles area: “We started with only a single store and now we have seven locations in Southern California.”

A meeting of the creditors has been set by the court for July 30, 2009.

--Therese Iknoian



SNEWS® View:
And the “slow” summer season has only barely begun…. We fully expect many retailers to downsize to survive. That’s only smart business right now. We keep hearing about others who may have to fold. With the forecasts for the economy getting a little better, we’ll look for the downsizing to help more retailers eke their way into 2010.

--SNEWS® Editors

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