As many British Columbian businesses begin to re-open their doors this week, members and former employees of Steve Nash Fitness World continue to wonder whether they will have a gym or a job to return to in the weeks and months ahead.
SNFW Fitness B.C. Ltd. – which owns more than 27 fitness locations in B.C. – is partway through a sales process to secure a buyer and avoid bankruptcy.
“People are engaged and going through the data room,” said Mario Mainella, a licensed insolvency trustee with The Bowra Group, which is overseeing the case.
According to Mainella, more than 30 prospective buyers were initially identified and approached at the start of a month-long sales process that began late last month. He said these groups are, for the most part, connected to the health and fitness industry as operators, financiers or combinations of both. They are not exclusive to Vancouver.
The trustee and MNP Corporate Finance Inc. – hired to assist with the sales process – have also considered expressions of interest from parties not initially identified as prospective buyers.
“We want qualified purchasers that can prove their financial wherewithal, because the last thing we want to do is go down a process and then the successful bidder either can’t close or they’re just not going to be successful in running the company after,” Mainella explained.
“They’ve got to show that they’re in business and they know how to run businesses as well.”
Today (May 20) is the deadline for all qualified bids. If a successful bidder is selected, their identity will be shared with all qualified bidders by May 29. The deal will require BC Supreme Court approval.
The May 29 deadline is not set in stone, but Mainella said efforts are being made to keep to the original date.
“That’s the day that we’re working towards for a number of reasons, including landlords, employees, creditors, everything.”
According to court documents, SNFW Fitness owes more than $35 million to dozens of creditors. Landlords on 32 leased locations are additionally owed $1.5 million for rent not paid in April. Amounts owing to employees – such as severance – and to members who prepaid for memberships and personal training sessions have yet to be properly accounted for in the company’s list of creditors.
Approximately $3.4 million is owed to unsecured creditors who are eagerly awaiting the result of the sales process.
“That’s kind of our lifeline,” said Mirek Rosh, the sole owner of The Original Dirtbusters Janitorial Service and Canadian Cleaning Consultants. Both companies are unsecured creditors collectively owed more than $362,000 by SNFW Fitness, and Rosh is not only banking on being able to collect some of what he is owed, but on being able to resume cleaning SNFW Fitness locations – work that represented about 60% of his business.
“The amount owing is going to make me personally broke and the company broke too,” said Rosh, who paid his workers out of pocket for services supplied to SNFW Fitness over a month and a half.
“That loss is basically my 20 years’ savings.”
Brent Gasiorowski, director of Big Fish Creative, says what has happened at SNFW Fitness came as a surprise.
“How the whole thing went down was very last-minute and a surprise to everybody,” he said.
Big Fish Creative was seven or eight months into a one-year contract SNFW Fitness, and is listed as being owed a little more than $12,000 by the company. The real amount owing is about double that, said Gasiorowski, who spent 22 years leading marketing efforts at Fitness World, and later, Steve Nash Fitness World and Sports Clubs.
“We definitely had a lot invested into this client. A lot of time, a lot of energy, a lot of hours,” he said, adding that he intends to write off the amount his firm is owed.
“It’s a bit of a burn when you put so much into it and then you don’t monetize on it.”
Kimberley Robertson, a partner at Lawson Lundell LLP and counsel to SNFW Fitness, told BIV that the company believes the sales process will allow it to restructure operations in a way that will "maximize recovery to the majority of the stakeholders."
"Aside from maximizing recovery to secured creditors, a viable purchaser will, ideally, be one that preserves the human capital of the workforce by hiring back many employees ... and the goodwill by providing an opportunity for prepaid members to realize value from those memberships with the new entity," she wrote.
"In contract, a bankruptcy would provide no recovery to those important stakeholders."