CHICAGO -- For the second time in 17 months, Bally Total Fitness has filed for bankruptcy. This time, the company has also put itself up for sale.

Bally made the filing today in U.S. Bankruptcy Court for the Southern District of New York in Manhattan. The Chicago-based company, which reported $1.4 billion in assets and $1.5 billion in debt, plans to sell itself or reorganize under Chapter 11.

“The burden of Bally’s long-term indebtedness, coupled with the lack of refinancing options in today’s constrained credit markets, have limited our ability to restructure using out-of-court vehicles, leaving Bally with no alternative other than the actions announced today,” Bally CEO Michael Sheehan said in a statement.

Bally filed for bankruptcy in July 2007, only to emerge from Chapter 11 protection two months later as a private company. Bally’s emergence was buoyed by $233.6 million from investors led by Harbinger Capital Funds.

According to a report by Bloomberg, Bally reported it has more than 100,000 creditors. The company owes $247 million in unsecured debt to U.S. Bancorp and $231 million to HSBC Holdings. Bally’s debt includes $291 million to first-lien lenders, $247 million to second-lien lenders, and $221 million is owed on subordinated notes.

In court papers, Bally listed its net revenue for the nine months ending Sept. 30, 2008, as $479.5 million, Bloomberg reports. Bally also said in court papers it has 6,820 full-time and 7,750 part-time employees.

In the company statement, Bally said that it will use existing cash reserves to fund its operations. If Bally is able to negotiate a sale with the lenders, they would provide additional cash through debtor-in-possession financing, according to the statement.

In its July 2007 bankruptcy filing, Bally listed assets of $397 million and debt of $761 million. Although there is no prepackaged plan in place with the second filing for bankruptcy, Bally said it hopes to emerge from bankruptcy as quickly as possible.

Bally has 347 clubs in 26 states. Bally’s 39 clubs in the Caribbean, Mexico and Asia are not affected by the filing, says Bally spokesperson Larry Larsen.

With regard to possible club closures in the United States, Larsen would only say that Bally constantly evaluates its real estate portfolio as part of its ongoing business process.

“The company will continue to look at opportunities to manage its portfolio while meeting its customers’ needs,” he says. “Bally fully anticipates that it will continue operating as a national brand with a national footprint.”

Larsen would not discuss membership trends, but he did say that during the past five months, Bally had significantly improved its operating processes, expense management and organizational structure, leading to a marked improvement in its current and projected operating performance.

Bally has retained Kramer Levin Naftalis & Frankel LLP as bankruptcy counsel and Houlihan Lokey Howard & Zukin as its financial advisers.

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