Fitness First plans CVA for 81 clubs with 750 jobs put in the balance
Troubled gym chain Fitness First has told creditors it intends to offload 81 clubs in a company voluntary arrangement that leaves up to 750 jobs in the balance.
The CVA, first revealed by The Daily Telegraph, will help the company avoid going into administration by giving up onerous leases it can no longer afford.
Founded in Bournemouth in 1993, Fitness First has about 150 gyms in the UK and is struggling to keep up rental payments after a drop in membership revenues.
CVAs have been controversial in the past because they leave landlords out of pocket. However, in the case of Fitness First, the company has offered landlords a “claw-back” on future profits if they agree to sign up to the deal.
Richard Fleming, who heads restructuring at KPMG and is supervising the CVA, said landlords could recover between 23p and 28p in the £1, compared to less than 5p in the £1 if the business went into administration.