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Gold’s Gym Can Tap $20 Million Bankruptcy Loan as Gyms Stay Shut

May 6, 2020, 11:38 PM

Gold’s Gym International Inc. gets access to a $20 million bankruptcy loan that will keep it operating as most gyms across the globe remain shut to curb the spread of the coronavirus.

  • At debtor’s first bankruptcy hearing, Judge Harlin DeWayne Hale grants permission for the gym to access a $20 million debtor-in-possession loan provided by its majority shareholder TRT Holdings Inc.
  • Access to financing is needed on an “emergency basis” to turn around the business, open more gyms across the country and eventually stabilize revenue, Aaron Kaufman of law firm Dykema Gossett said on behalf of the company
    • Debtor aims to file plan of reorganization imminently, with disclosure statement hearing in mid-June, confirmation hearing at the end of July, and emergence from bankruptcy in early August, Kaufman said
    • Gold’s Gym has been cash flow negative as locations stay shut, per lawyer
  • Texas and Oklahoma gyms are expected to open this month with plans to follow in-state guidelines, Chief Administration Officer Paul Early said
    • Gym will limit members to 90-minute workouts, with access to cardio and strength machines, keeping all other areas closed including studios and pools, Early said
    • Gold’s closed 30 gyms permanently before the filing, and has a list of other under-performing gyms that it could decide to close in the future
  • Co. anticipates needing around $3.5 million in new financing during the first 14 days of the case, according to counsel and court documents
    • Anticipates needing $9 million in the first 30 days, and up to $20 million over the course of the 13-week budget period, according to filing
  • Debtor also gets interim approval to pay employee wages, taxes, and other standard operating expenses
  • The case is GGI Holdings, LLC, 20-31318, U.S. Bankruptcy Court, Northern District of Texas (Dallas)

To contact the reporter on this story:
Katherine Doherty in New York at kdoherty23@bloomberg.net

To contact the editors responsible for this story:
Rick Green at rgreen18@bloomberg.net

Dan Wilchins, Nikolaj Gammeltoft

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