Keys' bankruptcy filings: $28 million liability, $11.7 million assets

According to statements filed May 13 with the U.S. Bankruptcy Court, Northern District of Texas, in Dallas, Keys Fitness has liabilities of $28 million with assets of $11.7 million, all declared as personal property.
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Financial statements filed by Keys Fitness in its Chapter 11 reorganization case show the company has liabilities more than double its assets.

According to statements filed May 13 with the U.S. Bankruptcy Court, Northern District of Texas, in Dallas, Keys Fitness has liabilities of $28 million with assets of $11.7 million, all declared as personal property.

Of those liabilities, $13.3 million belong to secured creditors, nearly all of which is declared as belonging to Jacobson Partners, the private equity firm that acquired all of Keys' bank debt in early January. Jacobson (www.jacobsonpartners.com) is a firm that per its website "makes control investments in underperforming companies."

The list of unsecured creditors is nearly 40 pages listing mostly service providers but also a few fitness equipment service shops, other retailers and suppliers in Asia. Co-debtors include Jacobson Partners, Keys Backyard, Keys Fitness, Tim Chen and Icon Fitness.

An involuntary Chapter 7 bankruptcy liquidation was filed in late February by Keys Backyard, partly due to mounting debt in a less-than-successful spa business began when Keys acquired Image Spa from Icon Fitness in early 2005. Insiders have speculated the Backyard case could have affected Keys Fitness' financial health, which with the bankruptcy reorganization filing in mid-April is so far protected.

The Backyard and Fitness cases were combined into one case by the court after a joint request by representatives, although the lead case is Keys Fitness.

The next hearing in the case was set on May 14 for May 23 to include reviewing requests regarding financial affairs such as financing and using cash collateral.

Although Keys executives have not returned recent calls or emails, the company had told SNEWS® in January that it was not going away.

SNEWS® View: At this point, it seems as if the Chapter 11 filing could have been a tactical move to keep possible creditors seeking money related to the spa division away from the door of Keys Fitness. We still aren't convinced that the action will mean Keys Fitness is going to be around for the long term as an executive had in the past insisted.

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