Blink Fitness files for Chapter 11 bankruptcy, to close 10% of locations

In its Chapter 11 petition, filed in Delaware bankruptcy court, Blink listed both assets and liabilities in the $100 million to $500 million range. Total debts for Blink and its affiliates filing for Chapter 11 amount to more than $280 million, according to a court affidavit from chief restructuring officer Steven Shenker on Monday, which also suggests the debtors may reject leases of certain facilities that are no longer in operation as part of wider cost-cutting.

The company said Monday that it has seen “continuous improvement” in recent financial performance, with revenue increasing by 40% over the last two years.

Blink also pointed to recently announced efforts to boost member experiences in its most popular gyms. Monday’s bankruptcy filing arrives just months after the company announced a multimillion-dollar investment that included upgrading 30 of its most-trafficked locations with more than 1,700 pieces of new equipment.

The company had 94 corporate-owned locations and seven owned by franchisees, according to its Chapter 11 court petition.

In a statement, Blink Fitness president and CEO Guy Harkless said the company’s leadership determined that using a court-supervised process to facilitate a sale “is the best path forward for Blink and will help ensure Blink remains the destination for all people seeking an inclusive, community-focused gym.”

Blink did not immediately provide many details about the sale it’s pursuing. The chain is owned by luxury fitness company Equinox Group, whose brands also include Soul Cycle, Pure Yoga and Equinox Fitness Clubs. The membership prices of those clubs are far more expensive than Blink’s rates.

Equinox is not listed as a debtor in Monday’s Chapter 11 documents and is not expected to file its own bankruptcy petition.

Blink’s bankruptcy filing arrives as much of the fitness industry works to bounce back pandemic-era losses. Gyms and workout studios were among the hardest hit during the beginning days of COVID-19, as lockdowns shuttered or significantly limited many operations — including Blink, which was forced to temporarily close all of its gyms at the height of the pandemic, the company’s bankruptcy documents note.

Patrick Collins, partner at Uniondale-based Farrell Fritz and a specialist in bankruptcy and creditor rights, said debt can often be behind a company’s decision to file for bankruptcy, even if a business is growing its sales and customer base.

In 2020, due to regional lockdowns, Blink said it had to close operations for nine months, relying on loans and landlord concessions to keep the business afloat, according to bankruptcy court documents.

“Even though  COVID is a couple years in the past, it’s possible that the leveraging is coming home to roost,” said Collins, who is not involved in Blink’s bankruptcy case.

“What they did during that time to keep the business alive was obtaining additional liquidity by borrowing money,” Collins said. “In the words of the company, those efforts left the company overleveraged.”

But gyms that made it through the worst have seen some stability. Visits to major fitness chains were up nearly every week between January and April of this year compared to 2023’s numbers, according to recent data from Placer.ai, which tracks retail and foot traffic.

— With The Associated Press