Thousands of Jobs Online as Virgin Active and Owners Await Decision

Thousands of Jobs Online as Virgin Active and Owners Await Decision

Thousands of health and fitness jobs are at stake as Virgin Active awaits a decision that will determine whether it goes into insolvency.

Sky News understands that the gym chain will find out as early as this week whether a restructuring plan facing homeowner opposition will receive court approval.

Sources have said that if the so-called Part 26A proposal is blocked, Virgin Active could fall under administration within days.

Such a move would potentially put more than 2,000 jobs at risk, as the health and fitness industry tries to get back on its feet after a year of turmoil.

Brait, the majority shareholder of Virgin Active, has indicated that he will not inject more capital into the company unless the restructuring is approved.

The proposals are being followed closely by insolvency practitioners and lawyers who believe their implementation by Virgin Active could herald a wave of similar plans.

Virgin Active has 40 locations in the UK

NCP, the car park operator, has announced that it wants to pursue such a financial reorganization.

The owners, including Aberdeen Standard Investments and British Land, have argued that they should shoulder a disproportionate share of the financial pain of Operation Virgin Active.

Landlords will be forced to write off millions of pounds in rent arrears and agree to future reductions if the restructuring is approved.

The gym group, which is partly owned by Sir Richard Branson, says the proposals represent a “holistic but fair solution, with shareholders contributing more than 50% of the proposed contributions”.

The court ruling will come amid a fierce debate over the impact of the pandemic on business owners, who argue that a government moratorium on evictions has unfairly penalized them.

Britain’s leading commercial real estate trade association has warned that approval of the restructuring of Virgin Active “would set a dangerous precedent.”

Virgin Active’s plans follow a glut of controversial voluntary deals from the company in recent years, which have been used by retailers such as Arcadia Group, Debenhams and New Look.

Some of these chains fell apart even after seeing CVAs voted by creditors.

Virgin Active has seen its roughly 40 UK locations forced to shut down for most of the last year, exacerbating the financial pressure it faces.

He wants to implement his refinancing under Part 26A of the Companies Act, which means that a group of creditors like its owners risks being “crowded” – or forced to agree to even terms. they vote against the plan.

Launched in Great Britain in 1999, the group now has 236 clubs in eight countries, including Australia, Botswana, Italy and South Africa.

At the end of 2019, it had more than a million members around the world.

However, the impact of the pandemic has been severe, resulting in a halving of income last year and a loss before interest, taxes, depreciation and amortization of £ 42million.

Virgin Active also saw 100,000 members leave during the year.

Under his proposals, his shareholders would inject £ 45million in cash, along with around £ 17million in royalty deferrals.

Deloitte, the accounting firm, oversees the restructuring plan.


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