Town Sports disclosure statement draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Oct. 30 – Town Sports International, LLC’s disclosure statement for its Chapter 11 plan of liquidation drew an objection Friday from region 3 U.S. trustee Andrew R. Vara, according to a filing in the U.S. Bankruptcy Court for the District of Delaware.

“The disclosure statement provides no more than cursory dividend projections, provides no record to aid in determining whether the plan is feasible and lacks a liquidation analysis,” Vara said in his objection.

“The disclosure statement contains no material disclosures to aid in determining if the plan will pay creditors not less than they would receive if the case were one under Chapter 7 of the Bankruptcy Code.

“In addition to the material flaws of the disclosure statement, the plan is not confirmable because, among other things, it provides for a discharge to non-individual debtors in a liquidating case, attempts to impose a 9019 settlement standard upon parties who have not expressly agreed to a settlement, seeks to exculpate future conduct and seeks to deprive claimants of their rights of recoupment.”

Vara said that by defining the debtors as a released party, the debtors seek a discharge indirectly.

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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