Town Sports bid procedures OK’d, gets further access to DIP loan

By Sarah Lizee

Olympia, Wash., Oct. 13 – Town Sports International, LLC obtained court approval of the bidding procedures for the sale of substantially all of its assets, according to an order filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, 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 debtor-in-possession financing facility.

The debtors will not 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 bid deadline is 5 p.m. ET on Oct. 26.

An auction will be held on Oct. 28, if necessary.

The sale hearing is set for Nov. 3.

Further DIP loan use

Also on Friday, Town Sports received further interim access $5 million more of its $32 million priming super-priority senior secured DIP term loan.

As previously reported, the company obtained interim court approval to access $15 million of the loan initially.

Fitness Recovery Holdings, LLC is the lender.

The facility is set to mature 120 days from the petition date.

Interest will be 10% per year, payable monthly in cash.

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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