In statements of financial affairs required by the courts in bankruptcy cases, Fitness Holdings International has said it has liabilities of $28,791,811 but assets of only $23,480,884.
Of those liabilities, $18.8 million are to its bank as a secured creditor, according to 418 pages of statements and addendums filed Dec. 4 and signed by Kenton Van Harten, president and COO of Fitness Holdings International (FHI). FHI, which is owned by Hancock Park (www.hpcap.com), is the holding company for Busy Body Home and Omni fitness stores.
The main form also stated that as of Oct. 20 when FHI filed for reorganization, it operated 111 stores in 15 states and used 13 warehouses in nine states. It has since moved from its Long Beach, Calif., location upon approval of the court (to lower its overhead costs with Long Beach rent going for $15,338 a month) to Torrance, Calif. In addition, it stated as of Dec. 4 it operated 85 stores, still in nine states.
FHI received approval of the court in early November to move ahead with store closing sales and start shuttering stores. (Click here to see a Nov. 7, 2008, SNEWS® story, "Court allows FHI to move ahead on store closing sales, use cash collateral.")
Unsecured priority claims equal $692,560 as wages and other compensation to employees, as well as debts to various city and county agencies, media and other service providers. So-called unsecured non-priority claims make up the remainder and include suppliers, in descending order of debt, such as Life Fitness ($1.3 million), Aerobics Inc. ($1.1 million), Precor ($750,000), LeMond Fitness ($703,000), and Hoist ($630,000), all considered “trade debt.”
In November, the U.S. Bankruptcy Court, Central District of California, appointed Tom Staub of Aerobics Inc. chairman of the creditors committee, the same post he held when the first Busy Body went bankrupt in 2001 after Hancock Park had built it then sold it. Other committee members were to include Dan Tanner, Life Fitness; Jeffrey Patrick, Hoist; and David Nees, Fitness Resource. The creditors’ meeting will be Dec. 18 in Los Angeles.
Meanwhile, FHI received approval on Nov. 25 to hire Kibel Green Inc. (KGI) as its financial advisor and investment banker. Per court documents, KGI was to earn $25,000 per week for eight weeks as of the date of the initial bankruptcy filing, then $15,000 per week thereafter until the employment is completed. SNEWS has learned the company’s representatives have been calling other retailers to offer for sale one or more stores in their areas as a part of their contract. The memo offered to potential buyers includes a summary that notes for the fiscal year 2008, ended June 30, the companies gross profit as a percent of revenue was 38.3 percent, down from 41.3 percent the previous year and from 42.1 percent the prior year. The EBITDA margin was highest (12.9 percent) for the Colorado-area stores and lowest (8.9 percent) for the Northwest stores, with others falling in between.
To read more about the original filing for reorganization by FHI, click here to read an Oct. 21, 2008, SNEWS story, "Omni/Busy Body Home parent FHI files Ch. 11 reorganization for entire group, plans sale of stores." The third major bankruptcy filing or retail shuttering for the fitness industry this year, FHI joined Delaware-based Leisure Fitness (19 stores on Sept. 19 -- click here to read story), and Connecticut-based Total Fitness (a nine-store operation) in May (click here to read story). However, Leisure's operation and the Northeast and mid-Atlantic region has now been tackled aggressively by several other operators -- click here to read a Nov. 28 SNEWS story, "Musical chairs in mid-Atlantic fitness retail market; Precor retailers shuffled."