A GYM firm facing financial troubles has avoided administration after creditors voted through a restructure of the company’s property portfolio.
Creditors for Fitness First, which has a gym in Berkhamsted, voted for a company voluntary arrangement (CVA) proposal.
Richard Fleming, UK head of restructuring at KPMG and supervisor of the CVA, said: “Today’s vote in favour of the CVA proposal not only addresses Fitness First’s operational issues around its property portfolio but also enables the wider financial restructuring and injection of fresh capital to take place, which were dependent on the CVA’s approval.”
A company can only propose a CVA when the alternative is administration and it must offer a better return to creditors. The Fitness First CVA is estimated to generate a return of 25-35p in the £1 for the landlords, versus less than 1p in the £1 in an administration.
Mr Fleming said: “In this way, both the creditors and the company are able to fix an underlying business issue without going through a full trading administration; good news for Fitness First’s creditors and good news for customers and employees.”