In the ongoing liquidation of The Fitness Experience, the bankruptcy court has told the company to file still-missing documents later this week at the lastest, while retailer Scott Egbert has nabbed 10 storefronts and all TFE inventory in a trustee's auction Feb. 23.
In the first matter, in a court order filed Feb. 18, Judge John Squires of the U.S. Bankruptcy Court, Northern District of Illinois, Eastern Division, has designated TFE's Douglas Pearson as the responsible officer of the company. Squires ordered that Pearson file with the court all outstanding lists, schedules and statements as set forth in the bankruptcy code. Those papers were due Feb. 5 based on TFE's filing for Ch. 7 liquidation late Jan. 21, 2005. The court gave Pearson and TFE 14 days from this Feb. 18 order to complete the requirement.
In the request for a court order to compel the filing by interim trustee Brenda Porter Helms, she noted that no request for extension of the deadlines had been received. Without the paperwork, she has been left unable to complete her duties. (See SNEWSÂ® story, Feb. 14, "TFE misses bankruptcy filing deadlines, Egbert bidding to buy assets.")
Meanwhile, Scott Egbert's bid to take over inventory and select TFE storefronts has been verified by the court.
"Nobody else showed up," Egbert told SNEWSÂ® about the Feb. 23 auction. "The deal is closing March 1."
In promoting the auction, the trustee has received an irrevocable offer from Scott Egbert -- investor behind the Home Fitness Group that includes Chicago Home Fitness, Utah Home Fitness, American Home Fitness and Precor Home Fitness -- to purchase all sale assets. Egbert, who has been granted bid protection of $150,000 and a breakup fee of $75,000, had offered to pay 75 percent of TFE's cost of the purchased inventory in Illinois and Michigan, and $10,000 for the assignment of several leases in Illinois and Michigan, which would include telephone numbers. Any other bidder would have had to post a similar deposit on or before Feb. 28 to be considered, and none was received.
The new stores, under the new company name "Fitness Experts," should open later this week once the signs are changed, Egbert said. The Fitness Experts stores will sell Life Fitness, Vectra and True, among other former TFE brands. Egbert said that the customers wanting those brands can go to those stores, while his current Chicago and American home fitness stores in Chicago and Michigan will continue to carry their current brands, including Precor, Vision, Pacemaster, Nautilus, Horizon, Hoist and Keys.
As with his other stores, the Fitness Experts group will be set up as a separate company with separate owner-managers to lower any risk that one area could damage another. Because of personnel matters, he declined Feb. 28 to name the two managers set to run Fitness Experts.
In other creditor news: A Feb. 22 filing by Life Fitness asked the court for a relief of a stay because of being a secured creditor. Life said that as of the Jan. 21 bankruptcy filing, TFE was indebted to Life Fitness for "at least $3,563,000 plus additional sums, costs and extensions." That included $2,396,000 in unpaid obligations and $1,165,000 in promissory notes, the document stated. It requested the court to release the collateral. Â
In addition, a creditors' meeting had been set for March 1, but without filed court documents listing creditors -- one of the mandatory forms still missing -- it is doubtful this will occur. For additional background, see SNEWSÂ® stories, including "The Fitness Experience bankruptcy case continues" (Feb. 4) and "Financial woes force The Fitness Experience into Ch. 7 bankruptcy liquidation" (Jan. 24).