Gold’s Gym is closing pursuant to an order issued today by a bankruptcy court.
The gym closed effective 1 p.m. today, according to a note on the door from Maureen “Mo” Suhadolnik, the gym’s executive director. She declined an interview request.
“I am so very sorry…this has been like a family for all these years,” Suhadolnik wrote on the note in which she said that Illini Bank, the largest creditor, is shutting down the gym.
U.S. Bankruptcy Court Judge Mary Gorman today granted a request from the bank to convert the gym’s bankruptcy petition from a Chapter 11 filing under which the gym would reorganize its finances to regain financial health to a Chapter 7 proceeding, meaning that assets will be turned over to a trustee and liquidated.
Stephen Scott, attorney for Gold’s Gym, said that the bank has claimed debts exceeding $3 million. The bank had foreclosed on the gym before it declared bankruptcy, and foreclosure proceedings that were put on hold by the bankruptcy will now proceed, Scott said.
Scott said that a buyer whom he would not identify was putting together financing when Illini’s request for liquidation was granted. The purchase price was nearly $1.8 million, the same amount a prior would-be purchaser had agreed to pay last spring. That deal fell through.
“I don’t think it was a good financial decision (to liquidate), but the bank made that decision,” Scott said. “We did have a buyer in line, and they were going to purchase at the original purchase price agreed to in April, 2015.”
Attorneys for Illini Bank could not be reached for comment.
In the bank’s request for liquidation filed in August, lawyers for Illini Bank wrote that the gym had a negative cash flow for eight of 13 months between the spring of 2014, when the gym filed for bankruptcy, and the spring 2015. Lawyers for the bank also questioned whether the Suhadolnik was serious about selling.
The first scheduled closing date for the sale on June 4 was canceled because the buyer didn’t have financing in place, according to court documents. Another scheduled closing date came and went, with the would-be buyer blaming “medical circumstances,” according to Illini Bank’s motion for liquidation. Lawyers for the bank wrote that the gym owner was content to take the prospective buyer’s assurances that “money would be wired today” instead of looking for a new buyer.
“The email correspondence from June 4, 2015 going forward strongly suggest that the Debtor’s management was more concerned with keeping its personal income stream intact than moving forward with a sale that likely would bring that income stream to an end,” lawyers for Illini Bank wrote in their request that the gym be turned over to a trustee and liquidated.
In her note taped to the gym door, Suhadolnik advised gym members to contact other gyms about honoring Gold Gym memberships.
“This is horrible and unexpected, particularly with a legitimate investor in place,” Suhadolnik wrote. “They (the bank) didn’t want to wait 3-6 weeks for the new investor to get funded by SBA (the U.S. Small Business Administration).”
Contact Bruce Rushton at brushton@illinoistimes.com.
This article appears in Oct 1-7, 2015.
