Town Sports International, the parent company that operates Boston Sports Clubs, filed for bankruptcy protection on Monday, according to the Boston Globe.
The company, which operates 185 gyms across the country, has been hard hit by coronavirus closures, and by members who say they’ve been continuously charged throughout those closures.
“The pandemic has caused unprecedented economic volatility and uncertainty which has negatively impacted our recent operating results,” the company said in a Sept. 4 financial report to investors. That same report argued that membership dues haven’t been collected since March, a claim that many gym members refute — and have sued the company over.
The Globe reports that at least three lawsuits are pending against the company. Massachusetts — home to 30 Town Sports International gym locations — has seen about 1,750 complaints related to Boston Sports Club fees filed with the attorney general’s office. Nearly 600 of those came after gyms reopened in July.
“BSC may be bankrupt but they still have an obligation to treat their customers fairly,” Massachusetts attorney general Maura Healey said. "We are watching this situation closely and will take appropriate action if BSC fails to meet its obligations to consumers.”
Meanwhile, the move to file for bankruptcy may make it difficult for the company to collect on any back fees. The move may be worth it, however, as the Globe reports that the company owes more than $23 million to its top 30 creditors alone — mostly in the form of unpaid rent. While in bankruptcy, the company can remain in business under a reorganization plan. A court-appointed trustee will manage payments to creditors, and pending civil suits against the company are placed on pause.
The company has sought the dismissal of the lawsuits brought against it. Peter Siachos, an attorney representing Town Sports International, said that members “frivolously contend that (Town Sports International) engaged in unlawful practices despite the fact TSI is and has been in compliance with the consumer regulatory laws that govern health club services.”
Meanwhile, the company has told members it isn’t going out of business, and plans to keep operating its clubs as usual throughout bankruptcy proceedings.
“Restructuring is the best way to properly respond to the COVID-19 pandemic, with the long-term goal to emerge as a thriving powerhouse in the fitness industry,” Town Sports said. "Town Sports will continue to operate its facilities as usual throughout this process, and members should not notice any changes to their fitness journeys.”
