Keys Fitness Ch. 11 bankruptcy combined with Keys Backyard bankruptcy case

The court overseeing the Keys Fitness Chapter 11 bankruptcy reorganization case has approved a request to combine the Keys Fitness case with the Keys Backyard filing from late February for joint administration.

In addition, since the initial filing on April 14 by Keys Fitness, the U.S. Bankruptcy Court, Northern District of Texas, in Dallas, has extended the deadline for the company to file its financial statements.

Also, Judge Harlin DeWayne Hale has approved a request to label the case as “complex.” The designation can be given to cases if, one, the debtor has total debt of more than $10 million and, two, there are more than 50 parties interested in this case.

Keys Fitness executives have not returned several emails or calls requesting comment. However, before the filing, an executive did say that Keys Fitness would “carry on in its own right.”

Keys Backyard, a 3-year-old company that was formed when Keys Fitness acquired Image Spa from Icon Fitness in early 2005, was forced into an involuntary Ch.7 bankruptcy liquidation by several creditors in late February. (Click here to see a March SNEWS® story, “Keys Backyard pulled into involuntary Ch. 7 bankruptcy.”) On April 18, the court approved the conversion of the case to a Chapter 11 reorganization. The two Keys cases were combined by the court after a joint request by both Keys Backyard and Keys Fitness representatives, with the lead case being Keys Fitness. Joint plans of reorganization may be filed, and the hearings may be jointly administered. However, both must file their own sets of financial statements and schedules.

The court also on April 28 approved a request for an extension to May 12 for Keys Fitness to file its financial statements from the previous deadline of April 29. Keys Backyard statements are currently delinquent after missing a mid-March deadline and the court has not approved an extension.

In a court filing, the top 20 unsecured creditors of Keys Fitness include mostly suppliers, but also industry inventor Ken Stearns for unpaid royalties and a trade debt with Nautilus. A meeting of creditors is scheduled for May 20 in Dallas with proofs of claims due by Aug. 18, 2008.