The owner of the Honolulu Club has filed for bankruptcy to reorganize debts and keep the facility open along with nine other fitness clubs in California and Nevada.
Los Angeles-based Meridian Sports Clubs California LLC filed Chapter 11 last week, stating that slumping revenue left the company unable to pay all its bills.
Meridian has arranged to borrow $1 million from New York-based lender Praesidian Capital to sustain club operations while in bankruptcy.
All Meridian clubs, which collectively employ about 575 workers and serve more than 18,000 members, will continue operating as usual with existing staff, and club members shouldn’t be affected, the company said in a statement.
Financial difficulties stemmed from the slumping economy that hurt membership and revenue over the past four years while property rents remained at pre-recession levels, according to Meridian. A chief goal in bankruptcy is to restructure property leases to reflect current market conditions, the firm said in its Chapter 11 filing.
"We believe that a timely restructuring through the court process will be the most expeditious way to clean up residual balance sheet issues created during the past four recessionary years," Chuck Grieve, Meridian’s chief executive officer and founder, said in a written statement. "While we offer an unwavering commitment to our members, we need to bring costs into line, including leases negotiated before 2008, and restructure our balance sheet."
Grieve added that he expects the company can exit bankruptcy in about six months. He also said the company intends to emerge from bankruptcy positioned for future growth.
The company listed assets between $1 million and $10 million, and debts between $10 million and $50 million.
Creditors with debts unsecured by Meridian assets are owed about $2 million, including $242,377 owed to the owner of the building in which the Honolulu Club operates, the filing said.
The building owner, a partnership between local businessman Richard Gushman and California real estate investment trust Douglas Emmett Inc., bought the property in 2008 in a deal that included the club then managed by Denver-based Wellbridge Co.
Meridian acquired the Honolulu Club in 2008, expanding a collection of fitness clubs Grieve assembled over nearly 20 years.
The Honolulu Club, founded more than 30 years ago, is an upscale fitness center with a country club-like atmosphere catering to business clientele.
Occupying four floors in the building across from the Neal S. Blaisdell Center on Ward Avenue, the club features social and recreational programs in addition to fitness equipment and programs. Amenities include a heated outdoor pool, a spa, a golf driving cage, a putting green, a bar and a lounge with live music.
