As planned and previously announced, Bally Total Fitness Holding Corporation (OTC: BFTH.PK) filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankrupty Code on July 31. The case was filed in the U.S. Bankruptcy Court for the Southern District of New York.
As part of the Chapter 11, Bally also filed with the court its Joint Prepackaged Chapter 11 Plan of Reorganization dated June 27, 2007. Bally will continue to operate its businesses as debtors-in-possession under the court jurisdiction and in accordance with applicable provisions of the bankruptcy code and orders of the court.
The plan was accepted by 98.8 percent in number and $203,877,690 (or 99.9 percent) in aggregate principal amount of the voting holders of the company’s 10 ½ percent Senior Notes due 2011 and by 78.0 percent in number and $276,532,800 (or 98.9 percent) in aggregate principal amount of the voting holders of the company’s 9 7/8 percent Senior Subordinated Notes due 2007. Bally has requested that the court confirm the plan as quickly as possible. A specific date for the debtors’ completion of reorganization cannot be estimated at this time, the company has said.
“The chapter 11 financial restructuring enables us to strengthen our balance sheet, while providing us with capital to make necessary investments in our clubs and facilities to better serve our valued members, as well as attract new members,” said Don R. Kornstein, Interim Chairman and Chief Restructuring Officer of Bally Total Fitness, in an official statement. “This is a positive step to ensure Bally’s future success and we appreciate the support and flexibility of our senior and senior subordinated noteholders. Importantly, the process allows us to continue normal business operations. Members, employees and vendors will not be adversely impacted.”
As previously disclosed, the plan will reduce the principal outstanding on the Senior Subordinated Notes by $150 million, reduce cash interest expense by as much as $30 million per year and provide the company with $90 million in capital through issuance of New Senior Subordinated Notes. Bally expects to emerge from Chapter 11 as promptly as possible, no longer subject to public reporting obligations.
The company said it has been unable to reach agreement on an alternative restructuring proposal put forth by certain shareholders and has determined that the prompt filing of the plan in bankruptcy court is appropriate. The company has informed these shareholders that it is prepared to continue discussions on their proposal.
During the proceedings, the company has said that normal club operations and member services will continue.
More information about the company’s Chapter 11 filing is available on its website at www.ballyfitness.com and from the company’s Chapter 11 website and hotline, www.kccllc.net/bally or (888) 251-3046