CHARLOTTE, NC -- Fitness Management Group Inc., parent company of Charlotte, NC-based Peak Fitness, has filed for bankruptcy.
The Chapter 11 filing took place Friday in the Bankruptcy Court for the Western District of North Carolina. As part of the restructuring, Fitness Management Group will sell its Peak Fitness assets to Nevada-based Fuzion Investment Capital LLC, pending the bankruptcy court’s approval.
Peak Fitness has debt between $10 million and $50 million, assets of only $100,000 to $500,000 and more than 100,000 creditors, according to bankruptcy filing estimates published by The Charlotte Observer.
In a press release, Fitness Management Group said the bankruptcy filing came as a result of property leases that were negotiated at the height of the real estate market, the continued economic downturn and the acquisition of select underperforming assets from the Capital Health Club chain in Raleigh. That group, which operated as Peak Capital Holdings LLC, filed for Chapter 11 bankruptcy in April.
“Peak Fitness has made some difficult decisions towards reorganization over the past couple of months, including closing the majority of our underperforming facilities in the Raleigh, NC, market,” Jeffrey R. Stec, CEO of Fitness Management Group, said in a statement. “Restructuring with Fuzion will allow the business to establish a re-energized platform for growth and a strong commitment to the best customer service in the industry. We look forward to working closely with Fuzion to help provide our members with a quality experience at an affordable price.”
Fitness Management currently has 17 Peak Fitness locations in North and South Carolina, down from the 33 clubs it listed on its Web site in April. Ten of the 17 clubs are in the Charlotte region.
In a letter to members posted on the Web site, Stec, who formed Peak Fitness in 1999, writes that the company’s intentions are to have the remaining 17 facilities stay open, although there may be some closures during the reorganization. In another document on the Web site, the company says that Fuzion will rebrand the company in the next few months and will make facility and equipment upgrades in the remaining open clubs. Whether the rebranding involves a name change remains unclear.