Gym Company Closure and Rescue Options

With consumer preferences diversifying to digital fitness platforms, home workouts becoming more prevalent, fluctuating gym memberships, and rising operational and equipment lease costs, gym company owners and the fitness sector are facing unique challenges. Gym company directors struggling with finances should seek insolvency advice and understand the processes available.

In this guide, we will offer clear, professional advice tailored to gyms and the typical challenges that gyms face. By understanding the options available to your gym, you will be able to make the most informed decision to address your company’s challenges.

Common financial challenges for gyms

We can help advise on specific financial issues your gym may be facing, including but not limited to: 

• Valuable assets
  Gyms rely on high-quality fitness equipment and machinery to attract and retain clients, making these assets critical to their operation. However, with such a high cost and the need for maintenance, equipment can quickly become a costly burden. We can explain how the sale of assets could be used as a form of funding for a liquidation procedure or as a tool for additional finance.
• Brand and community
  The brand and reputation of a gym is massively important to its success and standing within the local community. We understand the importance of that company goodwill and will give you the best advice on how to keep it if your company needed restructuring or a formal payment plan.
• Membership models
  Client gym memberships can typically dictate a gym company’s cashflow, with seasonal variation playing a significant part. We understand the importance of these intangible assets and can help protect them during certain insolvency procedures.
• Bounce Back Loans (BBL)
  The government-initiated Bounce Back Loans helped keep companies afloat during the  pandemic. However, some companies are now in a position where they’re struggling to make their repayments. We advise on the options you have when it comes to repaying your loan, or what would happen to it in a liquidation procedure.

How we can help rescue your gym

Below are two formal insolvency procedures that would allow your gym to continue trading whilst being protected from creditor action:  

• Repay your company debts in a payment plan via a Company Voluntary Arrangement (CVA)
  A CVA is a formal payment plan between a company and its creditors that enables the company to pay its unsecured debts in affordable monthly instalments, whilst being protected from creditors in the plan. The process would allow your gym to continue trading, keeping hold of its brand, community, and clients while giving you the opportunity to re-negotiate repayment terms with creditors. The arrangement typically lasts for up to five years, and upon successful completion, any remaining unsecured debt in the plan will be written off.
  More on Company Voluntary Arrangements
• Restructure your company through administration
  Administration is an insolvency procedure for companies that are insolvent. By entering your gym into administration, it will be in a temporary state of protection by a moratorium, meaning legal proceedings are halted. We will act as administrator and look to rescue your company as a going concern by attempting to restructure and turn it into a leaner, more profitable organisation. If this isn’t an option, we will also look at the most appropriate exit strategies from the procedure, whether that be a potential sale of the business, assets, the whole company, or transitioning to an alternative insolvency procedure.
  More on administration

How we can help close and liquidate your gym

If your gym is in financial difficulty or creditor pressure has reached a level which means the business cannot continue to trade, a formal liquidation would draw a line under its operations and write off your company’s unsecured debts.  

• Close your gym down via a Creditors Voluntary Liquidation (CVL)
  A (CVL) is a formal insolvency process designed for companies with unmanageable debts. The process would close your gym, ceasing its trading operations, realising any assets, and removing the threat of legal action. Both employees and directors would be entitled to claim for redundancy and other statutory entitlements, and if they can’t be paid out through the process they can claim from the Redundancy Payment Services. Once completed, your company’s unsecured debt will be written off and the company will be dissolved.
  More on Creditors Voluntary Liquidation
• Close your gym company down and start again via a Pre-pack Liquidation
  A pre-pack liquidation is a commonly used, informal term for a form of CVL, where the sale of your company’s assets is arranged before liquidation. This procedure would enable your gym to continue its business under the purchasing company, without any of the liabilities from the previous company. Assets such as client memberships or equipment can be transferred. Your work force also has the opportunity to be TUPE’d, and continue their employment.
  More on Pre-pack Liquidation

Commercial Finance

If you’re looking to bridge a gap in cash flow, or gain a financial boost, a form of commercial finance could help your company’s finances. There is a range of financing options, which we can advise on and tailor to your company’s circumstances. If you have assets which you can draw out equity from, asset finance could be an option to consider, or alternatively if you have late paying clients, invoice finance would help with unpaid invoices. Funding is typically only for companies that have a clear plan to repay any borrowing. Speak to us for a more detailed breakdown of which commercial finance options best fits your company.

How to get in touch with us: The next steps

If your gym is struggling financially, it’s crucial to explore the various closure and recovery options available. Each situation is different, and our experienced initial advisers can assess your gym’s finances and provide tailored guidance on the most appropriate steps forward. Whether you’re seeking to restructure your operations, secure additional funding, or consider an orderly closure, we’re here to outline the options and help you make informed decisions to protect your company’ interests.

1. Speak with our initial advisers  
   Contact our team via phone or online chat. If we can help, we will arrange a free consultation with one of our consultants to discuss your situation in more depth.   
2. Initial assessment  
   During the consultation, we will advise if an insolvency procedure is the most appropriate route forward or what alternative options are available.   
3. Formally engage with Wilson Field  
   After your consultation, if there is an appropriate route forward, we will issue the relevant documentation for you to formally engage us.   

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