Club Ventures Investments, the parent company of David Barton Gym, New York, filed for Chapter 11 bankruptcy today, according to two New York media outlets.
The reason for the filing is for the company to restructure its debt and leases and to forge a strategic alliance with North Hills, CA-based Meridian Sports Club, which also goes by Bodies in Motion.
Crain’s New York Business reports that David Barton Gym’s revenue in 2010 was $28.3 million but its debt was $65.5 million, debt that was primarily accrued from retail expansion between 2005 and 2009. Both Crain’s and the New York Post report that the company opened a lavish 40,000-square-foot gym in 2009 in Astor Place in Manhattan.
David Barton Gym has three clubs in Manhattan and one each in Chicago, Miami and Seattle. The company expects to emerge from bankruptcy in four months, according to Crain’s.
Meridian operates 12 clubs—10 of which are in Southern California, with one each in Northern California and Hawaii—and has a lease for a new club in Las Vegas. In the new alliance, Meridian will open the Las Vegas club under the David Barton name in September, with plans to open similar clubs in Los Angeles, Crain’s reports.
David Barton, founder of David Barton Gym, will remain CEO while Meridian CEO Chuck Grieve will become chairman of David Barton Gym, according to the Post. Clubs will not close, and staff will not be cut as a result of the bankruptcy, the Post reported.
In January, two fitness instructors filed a sexual harassment lawsuit against David Barton Gym on the grounds of a hostile work environment.
In July 2009, Meridian received $10 million of senior secured debt from Praesidian Capital Investors, New York. Last year, Meridian was tied for 38th place on Club Industry’s Top 100 Clubs list with a reported $30 million in revenue for 2009.