Court allows FHI to move ahead on store closing sales, use cash collateral
The court has approved a request by Fitness Holdings International, which filed for Ch. 11 bankruptcy reorganization on Oct. 20, to move forward immediately with store closing or liquidation sales as needed.
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The court has approved a request by Fitness Holdings International, which filed for Ch. 11 bankruptcy reorganization on Oct. 20, to move forward immediately with store closing or liquidation sales as needed.
It also approved the use of cash collateral by the business to fund ongoing operations as detailed in the company’s revised proposed budget. When FHI filed for bankruptcy, it operated 111 Omni and Busy Body Home retail stores and it has requested to close 19 stores. (Click here to see that Oct. 27 SNEWS® story, “Court continues hearing on FHI motions to close 19 stores, hold store closing sales, use cash collateral.”)
The document filed with the court on Nov. 6 that includes the budget also stated that cash may be used only for operations between Nov. 10 and Nov. 30. It noted that FHI’s total debt to the bank is $18.8 million, while its total cash and inventory on that date totaled $19.4 million.
According to the court, the company may immediately begin the sales, selling merchandise free and clear of all liens, encumbrances and interests while valid liens will attach to the net sale proceeds. The latest date the stores can be open for the sale is Nov. 30, and merchandise is not allowed to be moved into or out of a store or from the warehouse. Stores on the list include eight in California, one in Colorado, one in Nevada, and eight Omni stores in the East.
In other business:
>> The court has appointed a creditors committee, which includes Tom Staub, Aerobics Inc., as chair; as well as Dan Tanner, Life Fitness; Jeffrey Patrick, Hoist; and David Nees, Fitness Resource. Staub was chair of the creditors committee when the first Busy Body went bankrupt in 2001. Aerobics is owed $1.1 million, Life Fitness $1.3 million, and Hoist $637,900. Precor has the third-largest debt of $749,300, with LeMond Fitness just behind that at $702,700.
>> FHI has requested it be allowed to move its Long Beach, Calif., headquarters, where the rent is now $15,338 per month.
The court has scheduled another hearing on the company’s use of cash collateral on Nov. 25, and FHI must file its statements of affairs and court-mandated financial papers with the court by Dec. 4.
