Town Sports seeks approval of bidding procedures for all assets

By Sarah Lizee

Olympia, Wash., Oct. 5 – Town Sports International, LLC is seeking court approval of the bidding procedures for the sale of substantially all of its assets, according to a motion filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Tacit Capital LLC is working with an ad hoc group of the debtors’ prepetition term lenders to submit a stalking horse bid, which is a going-concern bid for the debtors’ operations. The stalking horse bid is a credit bid of the amounts outstanding under the prepetition facility, which credit bid the ad hoc lender group has agreed to cap at $80 million. Additionally, the stalking horse bidder retains the right to credit bid amounts outstanding under the $32 million DIP financing facility.

The debtors are not seeking to pay any break-up fee or similar bid protections.

The initial minimum overbid amount is equal to the sum of $1 million over the aggregate stalking horse purchase price plus the DIP obligations outstanding.

The debtors are proposing for an Oct. 26 bid deadline, an Oct. 28 auction date, if necessary, and a Nov. 2 sale hearing.

Town Sports is a Jupiter, Fla.-based owner and operator of fitness clubs. The company filed bankruptcy on Sept. 14 under Chapter 11 case number 20-12168.

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