What happened: The BC Supreme Court has approved the sale of SNFW Fitness B.C. Ltd.’s assets to FW Fitness BC Ltd.
Why it matters: The deal leaves the Bank of Montreal – the fitness company’s primary secured creditor – with a shortfall of approximately $25 million, and unsecured creditors owed in excess of $12 million.
An owner of Steve Nash Fitness and its CEO have had their bid to acquire the company approved by the BC Supreme Court.
FW Fitness BC Ltd. made an offer to acquire the assets of SNFW Fitness B.C. Ltd. for $9 million, and a 30% equity stake in FW Fitness BC.
Shareholders of FW Fitness BC include SNFW Fitness CEO Chris Smith, and an owner of the company believed to be Mark Mastrov, co-founder of SNFW Fitness and 24 Hour Fitness.
The deal is anticipated to close next week. It includes assigning the leases on 16 out of an original 29 locations to the new company.
FW Fitness also expects to be able to hire up to 50% of former SNFW Fitness employees.
The purchase agreement will leave the Bank of Montreal – the fitness company’s primary secured creditor – with a shortfall of approximately $25 million, and unsecured creditors owed in excess of $12 million.
The sale of SNFW Fitness took place under creditor protection. At the beginning of April, the company filed a notice of intention to file a proposal to its creditors under federal bankruptcy and insolvency legislation.
There does not appear to be any intention to file a proposal. In court on Thursday, counsel for the Bank of Montreal said he does not believe a proposal will happen by deadline.
As a result, SNFW Fitness will be deemed bankrupt August 4, with assets sold to FW Fitness BC beforehand, provided the purchase agreement closes.
