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In-Shape Health Clubs Files for Chapter 11, Restructures to Ensure Successful Future

In-Shape Files for Chapter 11

Following more than 10 months of the state’s COVID-19 shutdowns, California-based In-Shape files for Chapter 11 protection, allowing the company to restructure.

It’s been a devastating year for the industry. Very few fitness organizations will come out unscathed, especially those in states that have maintained tighter restrictions throughout the COVID-19 pandemic, such as California.

Following more than 10 months of the state’s COVID-19 shutdowns, California-based In-Shape Health Clubs has voluntarily filed for relief under Chapter 11.

According to Francesca Schuler, the CEO of In-Shape, the voluntary filing will allow the company to restructure and focus its resources to ensure its long-term viability and competitiveness. After closing 20 gyms due to the long-term shutdowns, the brand will emerge from its restructuring with a focused portfolio of about 45 to 50 clubs.

“Chapter 11 is well known as a tool to help companies that are distressed reorganize,” said Schuler. “We’re using it because we are a distressed company at the moment due to circumstances outside our control. We’re using a legal tool that exists — the Chapter 11 process — to restructure the company, which will enable us to emerge successfully and get back to serving members, hiring back our team and growing the business when they let us open the doors again in California.”

Paul Rothbard, the former CEO of In-Shape who led the company for 25 years, has formed Solutions Investment Group to purchase the business, subject to court approval. Aquiline Credit Opportunities, the company’s current secured lender, will also be financing the restructuring process.

“I am reinvesting in In-Shape because I believe in both the brand and the terrific team that has worked to deliver an exceptional member experience in the markets we serve,” said Rothbard, in a statement. “In-Shape goes beyond fitness to create inclusive communities within the clubs as well as continuing to provide new innovations in fitness, which is why we see tremendous value and potential in the brand.”

In-Shape Files for Chapter 11
One of 17 In-Shape Outdoor Clubs the brand has launched during the pandemic.

Although 2020 has been extremely challenging for the fitness industry and In-Shape Health Clubs, Schuler noted a few bright spots, explaining the brand will enter 2021 with a strong culture.

“My big headline for this year is pick your team,” said Schuler. “Because if you’re on the right team, you can literally survive anything. And that has been our story this year. That includes our internal team, our members and our advisors. It takes a village. We feel really grateful, and that’s been my lesson learned. Everything else — we’ll find a way to solve it if we have the right team to do it. That’s our story for 2020.”

In addition, Schuler and In-Shape are further convicted that gyms play a vital role in preventative health.

“To me, this year has proven the importance of health,” said Schuler. “We’re incredibly optimistic about the future and fitness being viewed as part of healthcare. At In-Shape, we really believe we’re an essential part of preventative healthcare and the pandemic has renewed our focus and mission to motivate more people to exercise for their health.”

With this in mind, In-Shape plans to continue to serve its community in a number of ways, including through the recent launch of a new digital platform called Find Your FYT, that’s aim is to draw more people into fitness. In addition, the brand has launched 17 In-Shape Outdoor Clubs with more on the way to continue to offer members a safe place to exercise. The reopening dates for California gyms are still to be determined.

“Despite tightly managing the business and ensuring we survive the pandemic, we’ve taken the opportunity to also lean into innovation for the future,” said Schuler.

As In-Shape files for Chapter 11 protection with plans to restructure, Schuler feels optimistic about the future.

“We have put in the time to do this right,” said Schuler. “We know it’s going to be awhile before there is recovery for the whole industry, but we are very optimistic about the future of our industry. We are confident our restructure and our new investor partners will position us to be a growth platform in the future.”

Rachel Zabonick-Chonko

Rachel Zabonick-Chonko is the editor-in-chief of Club Solutions Magazine. She can be reached at rachel@peakemedia.com.

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