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Crunch Fitness Chapter 11 plan goes for vote
Bloomberg News
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Published: 3/22/2010 8:43 AM

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Creditors of Crunch Fitness, once a chain of 19 high-end fitness clubs, can begin voting on the liquidating Chapter 11 plan that offers $150,000 to unsecured creditors. The bankruptcy judge in New York approved the explanatory disclosure statement at a March 18 hearing.

The confirmation hearing for approval of the plan is set for May 20.

Crunch filed for Chapter 11 reorganization in May and was authorized in September to sell the business in exchange for secured debt.

The buyer, an affiliate of Angelo Gordon & Co., bought the Crunch chain from Bally Total Fitness Holding Corp. in 2006 and purchased the first-lien debt in late 2008. The buyer retained Crunch by exchanging $40 million in secured debt for ownership, in the process leaving a deficiency claim over $21.6 million.

The plan, supported by the official creditors' committee, was made possible by a $150,000 carve-out made by the lender. In addition, the lender will pays costs of the Chapter 11 case, including professional fees. In return, the lenders are to receive a release.

The disclosure statement doesn't tell unsecured creditors how much they can expect to receive. It estimates that the deficiency claim of the secured lender will see one percent.

The petition listed assets of $104 million against $102 million in total liabilities. Debt included $56.7 million on a first-lien loan mostly owned by Angelo Gordon affiliates. There was a second-lien credit for another $22.7 million. The clubs, with 70,000 members, were located at filing in New York, Chicago, Los Angeles and Rock Creek, Maryland.

The case is In re AGT Acquisition Wind-Down LLC, 09-12889, U.S. Bankruptcy Court, Southern District of New York (Manhattan).