Meridian Sports Clubs California LLC, North Hills, CA, filed voluntary petitions to restructure under Chapter 11 bankruptcy last month, but the company says operations will not be interrupted.
Meridian, which also goes by Bodies In Motion, made the filings on Oct. 16 in U.S. Bankruptcy Court in the Central District of California, Woodland Hills, CA. The company listed assets between $1 million and $10 million and listed liabilities between $10 million and $50 million, according to court documents. Bankruptcy schedules will be filed next week, according to the company’s attorneys.
Meridian operates 10 clubs in California, Hawaii and Nevada. Seven of the 10 clubs are in Southern California. The Hawaii club is called The Honolulu Club.
Three of the clubs are David Barton Gyms, two in the Los Angeles area and one in Las Vegas. Last year, David Barton Gym filed for bankruptcy and forged a strategic alliance with Meridian Sports Clubs.
The company says memberships, offerings and programming will remain the same. Also, all clubs will operate regular hours and with existing staff.
“We believe that a timely restructuring through the court process will be the most expeditious way to clean up residual balance sheet issues created during the past four recessionary years,” Chuck Grieve, CEO and founder of Meridian Sports Clubs, said in a company statement. “While we offer an unwavering commitment to our members, we need to bring costs into line, including leases negotiated before 2008, and restructure our balance sheet.”
Grieve added that Praesidian Capital Investors, New York, which invested $10 million into Meridian in 2009, will allow the company to complete the financial restructuring in about six months.
Vendors who do business with Meridian Sports Clubs will be paid on an administrative priority basis for all goods and services the company receives. Employees are expected to see no change in pay or benefits as a result of the filing.
“We are starting to see some positive signs of improvement in many locations, which we find encouraging, but the restructuring is necessary to secure future growth,” Grieve said.
Meridian Sports Clubs last appeared on Club Industry’s Top 100 Clubs list in 2011. The company was tied for No. 38 on the list with an estimated 2010 revenue of $30 million, which the company reported in 2009. According to court documents in the bankruptcy filing, Meridian generated $23.1 million in 2010 and $21.5 million in 2011. The company also generated positive EBITDA (earnings before interest, taxes, depreciation and amortization) of $2.4 million in 2010 and $862,000 in 2011.
Meridian is being advised by its bankruptcy counsel, Pachulski Stang Ziehl and Jones LLP.