Gold's Gym files for bankruptcy, seeks to restructure debt

In a major impact of the coronavirus pandemic and the halt in businesses, US-headquartered Golds Gym has filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and it seeks to restructure its debt.

In a statement, the fitness chain has said: "On May 4, 2020, GGI Holdings, LLC and its affiliates (Gold`s Gym) filed voluntary petitions for relief under Chapter 11 in an effort to facilitate the financial restructuring of the company. This pre-negotiated filing will enable us to emerge stronger and ready to grow, and it is our intent to be on the other side of Chapter 11 by August 1, if not sooner."

Under the United States Bankruptcy Code, a `Chapter 11` debtor usually proposes a plan of reorganisation to keep its business alive and pay creditors over time.

It said that the global COVID-19 pandemic forced the company to take immediate action, including the decision to permanently close about 30 company-owned gyms, to maintain the strength and growth of the potential of the brand as well as ensure the continued viability of the company for decades to come.

The company, however said: "The filing should not impact our licensing division, it is not associated with any of our locally-owned franchise gyms, nor will it prevent us from continuing to support our system of nearly 700 gyms around the world."

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It said that while the COVID-19 pandemic certainly impacted the company-owned gym operations and the filing is expected to have no further impact on current operations.As part of the company`s typical "first-day" restructuring requests, the company will be seeking court approval to continue paying suppliers, vendors, and employees in the ordinary course on a go-forward basis, it said.