Gold’s Gym Files for Bankruptcy Protection Due to Coronavirus Pandemic
As the coronavirus pandemic began to infiltrate the US population, many businesses and services were ordered to temporarily close their doors as a bid to mitigate the rapid spread of the deadly virus. One of those non-essential businesses which had to reluctantly cease operations across the US were gym clubs, of which the most prominent being Gold’s Gym International.
The coronavirus pandemic had caused Gold’s Gym to temporarily shut down operations at all of the company’s gyms, which had a significant impact on incoming revenues, including membership revenues and royalty revenues. Thus, Gold’s was only left with the revenue stream of licensed apparel, consumables, and products – which alone fall significantly short of supporting the company’s overhead. As a result, Gold’s Gym recently reduced its workforce at company-owned gyms by nearly 98%; however, that was still not enough to remain afloat, so now the company has filed for financial restructuring under Chapter 11 of the US bankruptcy code.
A Chapter 11 bankruptcy is a very complicated and expensive bankruptcy protection case, and consists of a total reorganization of a company’s debts, assets, obligations, and business affairs. This form of bankruptcy is typically considered as a last resort after all other alternatives have been exhausted which thus gives a real sense of the sort of predicament the pandemic has put the company in.
Gold’s restructuring, which begun on May 4 and is expected to be completed by August 1, has thus far involved the permanent closure of 32 company-owned locations across the US. However, once federal and local governments begin easing COVID-19 restrictions, the company does plan on reopeing those locations which were only temporarily closed, in addition to bringing back some of its staff that was previously furloughed. Gold’s does plan on continuing to pay its corporate employees wages, benefits, vacation, and healthcare throughout the restructuring process.
Information for this briefing was found via Club Industry and Business Insider. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
