Major Recent Chapter 11 Filings: DavidBartonGym & No Fear Retail Stores

by Randall Reese

Several significant cases were filed recently across the country. Below, we have provided brief summaries of the case filings as well as links to some of the major pleadings that have been filed in the cases.

Club Ventures Investments LLC (Does Business As DavidBartonGym)

Club Ventures Investments and several affiliated companies, which operate the chain of DavidBartonGym fitness clubs in New York City, Chicago, Miami and Seattle, voluntarily filed for chapter 11 protection on March 2nd in New York. In total, the companies' six clubs have 13,500 members and generated 2010 revenue of $28.3 million. Club Ventures does not own any of the real estate where its clubs or executive offices are located (all are leased), but does have pre-bankruptcy debt of approximately $65 million. Major debt holders include Bank of America, Praesidian Capital Investors, LP, and LNB Holding LLC. Praesidian and LNB are also holders of equity in the debtors. The companies blamed their current troubles on their rapid expansion, which was less successful than they had anticipated. In December 2010, Club Ventures entered into a management agreement with Meridian Sports Club California, LLC, which operates 12 fitness clubs in California and Hawaii. The current cases have been prenegotiated with Praesidian and LNB, both of whom entered into a Plan Support Agreement prior to the chapter 11 filings.

All major court filings can be accessed at:

No Fear Retail Stores

No Fear Retail Stores, Inc. and two affiliated companies filed for chapter 11 protection on February 24th in the Southern District of California. The companies, headquartered in Carlsbad, California, were founded in 1990 and develop casual apparel under the "No Fear" brand name. The brand reached its peak popularity in 1995 when sales were approximately $140 million. Sales fell in the years after 1995 and the companies changed strategy, focusing on smaller retailers rather than department stores and "big box" retailers. They also began opening their own retail stores in 1999 and had opened 20 company stores by 2004 (at a cost of $250,000 to $400,000 per location).

No Fear had 55 retail locations (all leased) at the end of its 2010 fiscal year (August 31). However, same store sales in its stores decreased 19.4% in fiscal year 2009 and another 10.2% in the first three quarters of fiscal year 2010. Total fiscal year 2010 revenues from the stores were $37.6 million, which generated a small EBITDA loss. Since September 30, 2010, No Fear has closed 12 of its retail locations and had 41 remaining locations as of the bankruptcy filing.

The companies blamed their focus on the Southwestern United States, unwillingness by landlords to renegotiate leases, and the high cost of failed attempts in 2009 and 2010 to raise additional funding through a reverse merger with Gatorz Inc. for the bankruptcy filing. Court documents state that the companies hope to reorganize around an even smaller number of stores by securing third party financing.

All major court filings can be accessed at:

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Written by:

Randall Reese

Restructuring Concepts LLC on:

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