YouFit Health Clubs files Chapter 11 bankruptcy to facilitate sale

By Sarah Lizee

Olympia, Wash., Nov. 9 – YouFit Health Clubs, LLC and its subsidiaries filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Monday.

The debtors began the Chapter 11 cases to shed burdensome obligations, close underperforming locations and complete a going-concern sale of their other locations, according to court documents.

“Based on the pre-petition marketing process and interest received by potential purchasers, the debtors are seeking to pursue a sale of their assets on an expedited timeframe in order to limit administrative expenses and maximize value for the benefit of their stakeholders,” Brian Gleason, chief restructuring officer of YouFit, said in a declaration.

DIP financing

The debtors are seeking court approval to obtain up to $31,795,518 in a senior secured super-priority revolving credit facility, with $3.5 million available on an interim basis.

Of the amount, $10,598,506 is new money and up to $21,197,012 is a roll up of the pre-petition liabilities.

The DIP lenders include some of the company’s pre-petition lenders.

Interest will be 13.5% per year.

The facility will mature on the earliest of the closing date of the bankruptcy sale and 50 days after the petition date.

YouFit is also seeking court approval to use cash collateral of its pre-petition secured lenders.

Stalking horse agreement

The company has entered into an asset purchase agreement with YF FC Acquisition, LLC, an acquisition vehicle created by the proposed DIP lenders, which will act as stalking horse bidder for substantially all of the company’s assets.

Under the stalking horse agreement, the purchase price will be at least $75 million, plus the assumption of certain liabilities.

Debt details

According to court documents, the company has $50 million to $100 million in assets and $100 million to $500 million in liabilities.

The company’s largest unsecured creditor is Bank of America, NA of Fort Lauderdale, Fla., with a $10 million PPP loan claim. No other creditors were listed with unsecured claims of $1 million of more.

YouFit is a gym chain with headquarters in Deerfield Beach, Fla. The Chapter 11 case number is 20-12841.

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