| NEW YORK
NEW YORK May 6 Crunch Fitness, a chain of 22
gyms with 73,000 members in six U.S. cities, filed for
bankruptcy protection on Wednesday because of declining
membership and expensive leases and said it has agreed to be
bought by its senior secured lenders.
AGT Crunch Acquisition LLC, which operates gyms in New
York, Miami, Chicago, Los Angeles, Atlanta and San Francisco,
said in a statement it plans to be acquired by New Evolution
Fitness Co and certain affiliates of investment company Angelo,
Gordon & Co in a court sales process that allows rival bids.
Crunch expects the deal to close in 60 days, subject to
approval from U.S. Bankruptcy Court in Manhattan, where it
filed for Chapter 11 protection.
CH Fitness, the joint venture of creditors seeking to buy
Crunch, bought out all of its first lien debt from Goldman
Sachs Credit Partners for $46.2 million in December and
committed to fund up to an additional $17 million for working
capital, according to court documents.
The gym chain said it has secured enough capital to fund
its operations while it reorganizes.
Crunch had sales of $84.5 million in 2008 with operating
losses of $11.2 million, according to the filing.
Crunch Chief Financial Officer Michael Jacobs blamed those
losses on "deficient membership sales and the inability of the
Debtors to divest themselves of certain unprofitable club
locations that are saddled with overpriced long-term leases,"
according to court documents.
Crunch listed assets between $100 million and $500 million,
and liabilities in the same amount, and has 1,716 employees.
All but two of its locations will remain open, with members
at the two affected Manhattan gyms being transferred to other
The case is In re AGT Crunch Acquisition LLC, U.S.
Bankruptcy Court, Southern District of New York, No 09-12889.
(Reporting by Phil Wahba, editing by Leslie Gevirtz)