Close My Gym and Leisure Centre business

Rescue, Recovery, and Closure Options for Gyms

The health and fitness industry is an extremely valuable, yet increasingly competitive marketplace, which has undergone significant changes over the past couple of years. Changing consumer preferences have meant many personal trainers have transitioned to offering online training packages rather than traditional face-to-face sessions.

With this huge drop in income from personal trainer house fees, coupled with high fixed costs on equipment leases and escalating utility bills, gym owners up and down the country are wondering what the future for their business holds. This level of uncertainty makes planning for the future an almost impossible task for gym owners up and down the country.

“Called for help with closing non-trading companies and Chelsea advised me on what to do and instead of taking advantage as others would by taking on the case and charging loads. She gave me a solution that would cost £20. Very pleased with the service and thankful for Chelsea’s advice.”

AB

 

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Chelsea Williams
Business Debt Expert

Close your gym via liquidation

If your gym is struggling to manage its finances, or you are concerned it could be in financial distress in the near future, taking expert advice as to your closure options could help you decide on your next step.

If you fear your financial situation has taken your gym into a state of insolvency beyond the point of rescue, you may be considering placing your gym into liquidation. This is achieved through a formal process known as a Creditors’ Voluntary Liquidation – or CVL. As a formal insolvency procedure, you will need to enlist the help of a licensed insolvency practitioner who will be able to administer this process on behalf of your gym.

Liquidation should be the final step for any gym, however, in some cases it is the only appropriate next step once financial concerns have reached breaking point. Placing your gym into liquidation will allow it to be wound down in an orderly manner, with outstanding creditors given the chance to recover some of the money they are owed, depending on the level of assets in the company.

Liquidation will mean your staff will be able to make a claim redundancy if they are eligible, and you will be adhering to your legal responsibilities as the director of an insolvent company by taking professional advice once you know your gym to be insolvent.

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Rescue my gym

Just because your gym is currently experiencing financial worries, does not mean it is beyond rescue. Liquidation is not the only option for companies who have become insolvent. There are a variety of rescue, turnaround, and restructuring options for viable businesses for whom coronavirus related business disruption has been a body blow.

The first step towards identifying a potential rescue strategy is to determine the source of your gym’s problems. Have everyday running costs increased? Have monthly memberships dwindled? Are the lease agreements on your equipment and property becoming financially cumbersome? 

If you are confident your gym has the ability to bounce back, and there is a desire on your part and that of your fellow directors to effect a turnaround, a licensed insolvency practitioner can talk you through your options, allowing you to make an informed decision.

For those gyms which are looking to bridge a gap in cash flow, a financial boost from a loan could be what is needed. Our specialist commercial finance team are on hand to help you secure appropriate funding as cost-effectively as possible. Funding is only recommended for those companies who have a strong and reliable income stream and a clear plan to repay any borrowing. If your gym is already insolvent, another rescue option will need to be considered

A process known a Company Voluntary Arrangement (CVA) acts as a formal repayment plan for companies which are unable to service their borrowing under existing arrangements. An insolvency practitioner will draw up a proposal based on the indebted company’s financial commitments and its ability to repay them, and present this to creditors. Creditors will then be asked to vote on the CVA and, if agreed, the plan will become legally-binding on all parties for the duration of the CVA which is typically between 3-5 years.

CVAs work on the principle that your gym will pay its current debts and financial liabilities using future profits. Due to this, you will need to be able to convince your creditors that your gym is viable as a successful entity and will therefore be able to maintain these agreed payments for the term of the CVA. If you cannot demonstrate this then it is likely your creditors will reject the CVA and will instead push for an alternative such as compulsory liquidation if they feel they will be able to recover more of the money they are owed this way.

For those gyms facing growing creditor hostility, they may need to be placed into administration in order to give the company some breathing space while a long-term plan is decided upon. Companies in administration are protected from legal action by creditors through a moratorium which saves the company from being wound up by disgruntled creditors. Administration is not a long-term state for a company to remain in; sooner or later it must exit administration whether this is via another insolvency process such as a CVA, a sale to a connected or unconnected party, or with the liquidation of the company.