What happened: Members of Steve Nash Fitness World and Sports Club report the company has continued to charge them for memberships even though the company has closed its doors due to COVID-19 and is insolvent.
Why it matters: SNFW Fitness B.C. Ltd., which operates the chain of fitness locations, continues to operate under creditor protection and has not declared bankruptcy. The company is working to reverse monthly charges made since it closed its fitness locations.
Members of Steve Nash Fitness World and Sports Clubs report that the fitness chain has continued to charge them for memberships they are unable to use, even though the company is insolvent.
SNFW Fitness B.C. Ltd. – which operates more than two-dozen gyms under Steve Nash, Crunch Fitness and UFC Gym brands – closed all of its locations mid-March. Most of its roughly 1,500 employees have been terminated, and the company has successfully sought protection from creditors, which are owed more than $35 million.
Even though the company is no longer delivering fitness services, it is operational, and able to charge members for services it can’t provide during the COVID-19 pandemic.
“I have emailed and I have called three different phone numbers and nobody ever calls me back,” said Bev Ulmer, a long-time member of Steve Nash Sports Club.
Ulmer pays around $25 for two monthly memberships for her and her husband, who is in a nursing home. She says she was charged March 15 – two days before SNFW Fitness closed all of its locations – and again on April 15, nearly two weeks after the company filed a notice of intention to file a proposal under federal bankruptcy and insolvency legislation
Other monthly gym members have confirmed that they too have been charged since the company shut down its locations, terminated staff and filed a notice of intention.
Kimberley Robertson, a partner at Lawson Lundell LLP and counsel to SNFW Fitness, confirmed to BIV that the company advised its third-party software providers to no longer process pre-authorized debits for monthly member accounts after SNFW Fitness locations were closed.
"We understand that there were some failures by the suppliers in instituting the cancellation in a timely manner. To the extent that has occurred the company has, upon being notified of such issues, used its best efforts to remedy the situation as quickly as possible and apologies to any members that have had difficulties during this difficult time," Robertson wrote in an email.
Robertson added that the company has done its best to ensure issues regarding monthly payments have been or are in the process of being rectified. Charges are being reversed by the company's bank, which Robertson says is also rejecting any new direct deposits from pre-authorized charges.
While SNFW Fitness board directors have determined that the company is not a viable business without a significant equity injection, insolvency isn’t the same as bankruptcy, and legal experts explained to BIV that the company can continue to operate as it structures a proposal to creditors and embarks on a sales process recently approved by the B.C. Supreme Court.
Customers who pay by the month are not explicitly listed as creditors in the SNFW Fitness notice of intention, however individuals who have purchased personal training memberships and those who have prepaid for memberships are, and many such members are concerned about how to get their money back.
“It takes me back to a place where, all along the way, Steve Nash [Sports Club] would promise things and not follow through,” said Andrea Wilkinson, who has personally experienced a great amount of health and fitness success through her membership with Steve Nash Sports Club. That said, she claims that over years of membership, the company would promise her discounts or products that never materialized.
In January, she paid for personal training sessions she is now unable to use.
“I’m out $2,200. I’d like my money back. And there are people that work out there, that have much more serious health issues, and are senior, who are out all this money,” said Wilkinson, who works part-time for Home Depot.
“To me, that’s beyond ethical. I mean there’s the financial piece, and there’s the ethical side of it.”
Meghan Wong estimates she is owed around $3,800 for personal training sessions she prepaid for.
“I'm really frustrated because I've basically been robbed of $3,824 and no one is there to give me an answer about what the next steps are,” she wrote to BIV.
Wong and Ulmer have both approached their respective credit card companies, but say they were told chargebacks could not be issued because the company has not declared bankruptcy and has not closed permanently.
Since this article was originally published, BIV has heard from multiple individuals who successfully received credit card chargebacks for unused memberships or personal training sessions.
Mario Mainella, a licensed insolvency trustee with The Bowra Group, says that the amount SNFW Fitness may owe to members has yet to be accounted for, but is being looked at.
In the company’s notice of intention, personal training memberships and prepaid memberships are listed as collective groups of creditors each owed $250. That figure will be revised as more information becomes available.
This article was updated on May 6 to include comments on behalf of SNFW Fitness B.C. Ltd. and new information from SNFW Fitness members.