Town Sports, the bankrupt owner of New York Sports Clubs, secured $20 million in financing from its lenders to keep it afloat while it searches for a buyer.
The tentative deal comes just two days after Town Sports filed for Chapter 11 bankruptcy protection in Delaware and buys the company time to reopen and maintain most of its 190 gyms — which also include Lucille Roberts locations — as it tries to reorganize in court.
A group of lenders and private equity firm, Tacit Capital, agreed to give the company $20 million to fund its operations in bankruptcy and the group will be the so-called stalking horse bidder, forgiving $85 million in debt to buy Town Sports, according to reports of a virtual court hearing on Wednesday.
Other bidders would need to beat the $85 million offer to buy Town Sports during an auction.
Town Sports, which has 600,000 members in New York, Philadelphia, Boston and Washington, DC — many of whom have complained that it has continued to charge dues while its gyms were closed over the past six months — has recently reopened about 95 gyms, the company said on Monday.
The company filed for bankruptcy shortly before a debt payment was due this fall and amidst a cash crunch because its gyms were closed for months.