Thu, 21 Jun 2012 | DIVISION SALE
Fitness First has escaped administration after its landlords agreed to reduce their rent bills by over 70 per cent.
KPMG has guided the chain into a CVA, which will enable it to pay between 23p and 28p for every £1 that it owes. If it had gone into administration this repayment figure would have been just 0.5p.
The gym chain will sell 67 of its UK sites and have about £600 million of its debts wiped out. It is expected that easyGym will purchase a large chunk of these sites.
Another 79 gyms will be granted rent reductions with some of the biggest landlords gaining a stake in the business in return.
Barry Gross of law firm Berwin Leighton Paisner commented to the Guardian on the deal, “This is good news for the high street and gives more options to retailers to help them avoid administration.
"The biggest issue facing the retail market generally is that rents are high and in difficult trading conditions there is nothing they can do because it is a fixed cost. But if more retailers use these kind of CVAs, which is likely after its success at Fitness First, it should avoid future administrations – which are far more costly.”
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