When a Tennessee company’s liabilities outweigh its assets, a business owner might determine a need to explore debt relief options. There are several types of bankruptcy that have helped many business owners overcome financial crises. In some cases, certain businesses are able to remain open to clients or customers while restructured mortgage payments or other debt relief plans are implemented. In some cases, however, such as a string of fitness centers in another state that recently announced that they were closing, a bankruptcy court may order a company to shut its doors.
Gyms on the West Coast are shutting down
Several Fit Republic Gyms, located on the West Coast, were recently ordered to shut down following a change of status in their current bankruptcy plan. A trustee has been appointed to manage the company’s assets, which will be used to pay back creditors. Numerous long-time, loyal customers from the fitness centers say they were shocked when they learned that the gyms were closed.
What happens to membership fees that were paid ahead of time?
A list of customer names has been compiled. Once the trustee settles all existing debts, any funds left over will be used to compensate customers who paid their membership fees in full before the fitness centers closed. If there is enough money left over, customers might be able to receive a full refund. If not, then partial compensation may be the only option.
Rollover of membership might be possible
Owners of another fitness company have expressed their interest in taking over the gyms that are closing due to bankruptcy. If that happens, it might be possible for members to roll over their existing memberships rather than receive full refunds. In Tennessee and beyond, it is a good idea for concerned business owners to meet with an experienced bankruptcy law attorney before proceedings in order to seek legal clarification regarding obligations to compensate customers who have already paid fees or any other issue that is pertinent to the topic.