An operator of six health clubs in Bakersfield, In-Shape Health Clubs, has filed for bankruptcy reorganization after a dramatic drop in revenue forced it to permanently close 20 locations during the pandemic.
In a petition dated Wednesday, the Stockton-based company estimated its liabilities at between $100 million and $500 million, while indicating its assets totaled between $50 million and $100 million.
Former CEO Paul Rothbard has formed a company to buy the chain out of bankruptcy, which would require court approval, In-Shape said in a news release.
“I am reinvesting in In-Shape because I believe in both the brand and the terrific team that has worked to deliver an exceptional member experience in the markets we serve,” Rothbard said in the release, which added that the company’s secured lender, Aquiline Credit Opportunities, will finance the bankruptcy process.
The chain expects the bankruptcy will provide a clear path forward and allow In-Shape to emerge with a "focused portfolio of about 45-50 clubs that are well positioned and equipped to serve their communities and serve as a platform for a return to growth," according to the release
It added that although thousands of gyms have operated safely nationwide during much of the COVID-19 crisis, California's restrictive policies during the pandemic have badly hurt the state's fitness industry.
"Despite the shutdowns, In-Shape has developed technology and protocols to enhance the member experience, including new cleaning procedures, physical distancing guidelines and contactless member interaction," the company release stated. "Together these enable the company to provide a safe environment in its clubs while also operating outdoor clubs where possible so that it can keep serving its valued members during this difficult time."