Under the protection of its creditors, the company behind Steve Nash Fitness World and Sports Clubs plans to seek potential buyers and investors for its chain of more than 27 fitness facilities.
SNFW Fitness B.C. Ltd. filed for protection of its creditors on April 3 due to over $ 35 million owed to creditors.
According to an initial report from trustee The Bowra Group Inc., the directors of the board of directors of SNFW Fitness have determined that the business is not a viable business without a significant injection of equity.
Directors estimate that more than $ 10 million would be required to cover the company’s estimated costs and losses until the end of the foreclosure of COVID-19, excluding rents and leases, and assuming government restrictions are lifted in August. This is in addition to the $ 32 million owed to the Bank of Montreal, a secured creditor, and about $ 3.4 million owed to unsecured creditors.
SNFW Fitness also owes approximately $ 1.5 million to owners of 32 leased locations for rent in April. None of them were paid.
“We approach this question with the intention [a sale]”Said Mario Mainella, licensed insolvency trustee for The Bowra Group. He added that even with an extension, the sales process will take place in a short period of time.
“The liquidity rate is quite high and the bank will have to finance this,” Mainella told BIV.
“What this whole process is trying to do is maximize the positive impact in terms of recovery for creditors, a landlord with a tenant, employees with the ability to return to work and members with their membership and so on honored by potential buyers. “
SNFW Fitness had 30 days to file a proposal to creditors or request an extension after filing a notice of intention to file a proposal on April 3. If the company hadn’t done either before May 3, it would automatically have been declared bankrupt, and SNFW Fitness is unable to make a proposal to its creditors in less than two weeks, according to the trustee.
The Bowra Group’s first report indicates that SNFW Fitness hired MNP Corporate Finance Inc. through the trustee to initiate a tender sale process. The deadline for offers will be May 20, subject to court approval of the sales process, with a sales agreement signed before May 28.
Currently, court documents indicate creditors who owe $ 250 or more. The list excludes landlords, and Mainella says discussions are underway with all landlords to negotiate rent relief.
Amounts owed to employees – such as severance pay – or to customers who prepaid memberships have not yet been accrued, but Mainella confirmed that changes will need to be made to reflect what may be due to two groups.
“If there is a buyer at the end of this process, whom we think there will be, they will likely work with customers to honor what has been paid – we hope. It’s up to them, but it would make sense for a smart business. “
The trustee’s report, released this week, confirms that SNFW Fitness fired all of its staff except six key people. The company normally employs around 1,300 people. The former employees told the BIV that they had not been compensated.