11th-hour bankruptcy filing by ProSpot Fitness confuses future, asset ownership
A last minute filing by ProSpot Fitness for bankruptcy liquidation has stirred up confusion about what the next step will be for the troubled company, its creditors and its assets. At 11:50:16 p.m. on July 20, the U.S. Bankruptcy Court, Northern District of Georgia, received a petition from attorney Michael Robl for chapter 7 bankruptcy liquidation. The filing came into the court system 9 minutes, 45 seconds before Busy Body/Gyms To Go owners were officially to become owners of the lien and the assets of the company from its investor, Crossroads financial group.
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A last minute filing by ProSpot Fitness for bankruptcy liquidation has stirred up confusion about what the next step will be for the troubled company, its creditors and its assets.
At 11:50:16 p.m. on July 20, the U.S. Bankruptcy Court, Northern District of Georgia, received a petition from attorney Michael Robl for Chapter 7 bankruptcy liquidation. The company resolution authorizing the filing was signed by Charles J. Allen, Brian McNamara, Brian Fultz and Jamal Anderson, all listed in the court documents as members of the Georgia company’s board of directors.
The filing came into the court system 9 minutes, 45 seconds before Busy Body/Gyms To Go (GTG) owners were officially to become owners of the lien and the assets of the company from its investor, Crossroads financial group, per an agreement that had been in place since July 7. (Click here to see a July 17, 2009, SNEWS® story, “Investor takes over troubled ProSpot, Busy Body/Gyms To Go owners to buy lien and assets.”)
Already, the GTG group had been hired by Crossroads to relocate, secure and manage ProSpot inventory and assets, said GTG co-owner Carlos Vazquez. GTG logistics teams had moved all the equipment from warehouses at ProSpot’s Georgia warehouses on nearly two dozen 18-wheeler trucks to GTG (www.gymstogo.com) warehouses in Florida between July 9-14, including many hundreds of gyms, as well as benches, accessories and cardio equipment, plus office furniture and hundreds of pieces of electronics.
“Based on the bankruptcy filing, everything’s on hold,” Vazquez told SNEWS. “It stalls everything as the case proceeds through the court.”
He noted his company had an agreement with Crossroads but since the purchase was on hold because of the bankruptcy filing, additional expenses for storage, security, management and other costs would start tallying up as of July 21. Crossroads had executed the agreement with GTG based on an order issued July 7 from the Gwinnett County Superior Court granting the financial group possession of all ProSpot property in its case against ProSpot, Travis Hall (listed as CEO on corporate registration papers) and Michael Slawinski (product inventor).
Vazquez added that if GTG does not eventually become the owner, any other owner would have to pay the costs.
Attorney Robl did not return telephone and email requests for comment from SNEWS by deadline. ProSpot Fitness telephone lines are disconnected, and there are no employees remaining.
On July 21, the bankruptcy court entered an order for ProSpot to file by Aug. 4 all the required schedules and other bankruptcy forms now missing. In addition, ProSpot filed a list of creditors but not on the required matrix. The court noted that unless the mailing matrix was filed within 15 days, or by Aug. 5, the case could be dismissed without further notice or any hearings.
Topping the creditors list that is now filed with the bankruptcy papers is Travis Hall with a claim of nearly $2 million. Manufacturer Land America’s claim is shown as $1.2 million, while the debt to Crossroads is listed as $550,000. Five creditors are shown with six-figure claims, while the remaining 83 have less.
ProSpot Fitness (www.prospotfitness.com) was founded in 1998 by Slawinski.
SNEWS® View: This certainly will delay the return of ProSpot equipment to the market while many hundreds of gyms sit in warehouses under lock and key. It also calls into question who the next owner will be – or when – since court proceedings aren’t known for speed.