Budget gym chain Blink Fitness, along with more than 130 of its affiliates, has filed for Chapter 11 bankruptcy protection in Delaware, citing $280 million in debt and a plan to sell its assets. The filing comes after an uneven recovery from the COVID-19 pandemic and struggles with underperforming gym locations, according to a first-day declaration from Chief Restructuring Officer Steven Shenker.
Blink Fitness Files for Bankruptcy : Financial Struggles Leading to Bankruptcy
Blink Fitness, owned by Equinox Group, faced significant financial challenges as it navigated the aftermath of the COVID-19 pandemic. The company had to close its gyms for up to nine months in 2020 due to public health measures, leading to a severe drop in membership revenues. Despite negotiating rent reductions and other cost-saving measures, Blink was left “significantly overleveraged,” according to the declaration.
To cope with the financial strain, Blink took out a $20 million loan from its parent company Equinox in 2020, followed by a $50 million line of credit in 2022, which has since become a fully drawn $67.5 million line of credit with a 13% annual interest rate. Additionally, Blink owes $161 million on a secured loan from a group of lenders, with Varagon Capital Partners Agent LLC acting as the agent. This loan, initially $145 million in 2018, is due in November 2024.
Bankruptcy Plan and Asset Sale
As part of its Chapter 11 filing, Blink Fitness entered bankruptcy with a $73 million debtor-in-possession (DIP) financing proposal from its prepetition lenders, including $21 million in new funds. The company intends to sell its assets, with “multiple” nonbinding bids already received, and to minimize or reject certain contractual obligations.
