After ProSpot Fitness filed an 11th-hour petition for bankruptcy liquidation, the case has stalled in the court, leaving ownership of the company's remaining assets in limbo.
Since the Ch. 7 filing, which came in at nine minutes before Busy Body/Gyms to Go (GTG) owners were to gain ownership of the lien and assets from ProSpot investor Crossroads (click here to see a July 22, 2009, SNEWS® story), there has been little court activity. ProSpot attorneys didn't file required financial forms until the U.S. Bankruptcy Court, Northern District of Georgia, issued a notice of deficient filing -- and then the ProSpot forms came in at the deadline of Aug. 4.
On Aug. 5, the court declined Crossroads' motion for relief from the stay, which would have allowed the investment group to move forward in its arrangement with GTG. At that time, the court noted the denial of the motion was to give the court trustee time to further analyze the convoluted case, as well as claims from Ebbex, an engineering company; and from Land America, ProSpot's former manufacturer; and time to market the assets.
However, with no motions or action, Crossroads on Aug. 28 filed a second motion for relief from the stay on actions involving the debtor's property. It claims the debtor misrepresented some key facts when it obtained additional loans from Crossroads that resulted in Crossroads over-advancing money and ProSpot incurring debt that exceeded the maximum loan amount allowed.
"On the eve of the (lien) sale," the Aug. 28 filing stated, "in an effort to hinder or delay Crossroads' exercise of its lawful rights and remedies, Debtor filed this Chapter 7 case."
A hearing on the second motion is now set for Sept. 22.
Meanwhile, GTG owners, who moved all the ProSpot assets including equipment and office furniture, to its warehouses under contract with Crossroads, are also waiting for a an action, while also racking up daily storage and security expenses for Crossroads.
"We're still prepared and we're looking to move forward to satisfy the original deal," GTG co-owner Carlos Vazquez told SNEWS. "We're waiting to enter into an agreement with Crossroads to take possession of ProSpot in its entirety."
Vazquez had told SNEWS his company was in talks to buy all the assets, including equipment and intellectual property, from Crossroads (click here to see a July 17, 2009, SNEWS story). His company had been hired by Crossroads to relocate all the assets to a GTG Florida warehouse after the investment group had been granted possession by the Gwinnett County Superior Court in a case against ProSpot Inc, Travis Hall and founder Michael Slawinski. Assets include hundreds of gyms, as well as benches, accessories and cardio equipment from the Legacy, Fusion and Ascension lines.
Financial statements filed Aug. 4, 2009, list Hall as having the largest unsecured claim, or nearly $2 million of the total unsecured claims listed as $3.26 million. Creditors with secured claims are Crossroads, Ebbex and Land America. All three have liens listed of $2.2 million for all the assets of the debtor; however, if the value of collateral is deducted from the claims, Crossroad's claim is $550,000, Ebbex's is $325,364, and Land America's is $1.2 million, per the filing.
The filings also list the company assets as $2.2 million and its liabilities as $5.34 million.