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October 30, 2020 – The Court hearing the 24 Hour Fitness Worldwide cases has extended the periods during which the Debtors have an exclusive right to file a Plan and solicit acceptances thereof, through and including February 10, 2021 and April 13, 2021, respectively [Docket No. 1132]. Absent the relief, the Plan filing and solicitation periods were scheduled to expire on October 13, 2020 and December 14, 2020, respectively.
The Debtors’ motion requesting the extensions [Docket No. 1049] sums up the need for more time as follows: "The Debtors have filed a chapter 11 plan and are at a critical point in these chapter 11 cases, in which they are effectively managing a plan process with multiple parties in interest as well as a parallel marketing process to ensure that the Plan maximizes value for all parties in interest."
The Debtors have filed their Plan on October 7, 2020 following the October 7th execution of a restructuring support agreement with holders of approximately (i) 79% of the aggregate outstanding principal amount of DIP Claims, (ii) 73% of the aggregate outstanding principal amount of Prepetition Credit Facility Claims and (iii) 65% of the aggregate outstanding principal amount of Senior Notes Claims (collectively, the "AD Hoc Group"). The Ad Hoc group are providing the Debtors' with up to $250.0mn of debtor-in-possession ("DIP") financing and are poised to receive, inter alia, 95% of the emerged Debtors' equity in respect of their DIP financing claims.
The DIP motion provides: “The Debtors commenced these chapter 11 cases on June 15, 2020 (the ‘Petition Date’), in the midst of an unprecedented global pandemic that grounded the Debtors’ operations to a halt. In addition to the complexities arising from the commencement of chapter 11 cases of this size, the pandemic has required the Debtors to approach their reorganization with flexibility and creativity to ensure effective and efficient administration of the Debtors’ estates as the Debtors seek to emerge from chapter 11 as quickly as possible. Despite the challenges presented by the COVID-19 pandemic, the Debtors have made meaningful strides toward achieving their stated objective of administering these chapter 11 cases with deliberate expediency and care and have set a path toward emergence.
The requested extensions of the Exclusive Periods are warranted and appropriate…ample cause exists to grant the relief requested in this Motion. The Debtors have filed a chapter 11 plan and are at a critical point in these chapter 11 cases, in which they are effectively managing a plan process with multiple parties in interest as well as a parallel marketing process to ensure that the Plan maximizes value for all parties in interest. The Debtors are best situated and the most effective party to manage a plan process for the benefit of all stakeholders. Indeed, in a case with several constituencies with differing interests, these chapter 11 cases serve as a paradigm for why plan exclusivity should be maintained with the Debtors to avoid one party from leveraging its self-interest ahead of the best interests of the Debtors’ estates and all of the Debtors’ stakeholders. The Debtors therefore respectfully submit that the relief requested herein should be granted.”
About the Debtors
24 Hour Fitness is one of the nation’s leading operators of health and fitness clubs. The Debtors operate out of their two headquarter locations in San Ramon, California, and Carlsbad, California. As of March 31, 2020, the Debtors served approximately 3.4 million members in 445 locations across the United States, all of which are leased.
Prior to the March 2020 closure as a result of the COVID-19 pandemic, the Debtors operated in fourteen states and the District of Columbia, with 445 clubs serving approximately 3.4 million members.
Before implementing a reduction in force and a furlough program following the closure of the Debtors’ fitness clubs in connection with the COVID-19 pandemic, the Debtors employed approximately 19,200 individuals. Due to the closure of their clubs in March 2020, the Debtors furloughed approximately 17,800 individuals and reduced their workforce by approximately 700 individuals. After evaluating their go-forward club footprint and implementing certain strategic initiatives, the Debtors further reduced their workforce by approximately 8,300 individuals prior to commencing these chapter 11 cases. As of the Petition Date, the Debtors employ approximately 10,200 individuals, including approximately 8,100 individuals who are employed on a part-time basis.
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