Despite bankruptcy, workouts at David Barton Gym continue

Don’t worry, Las Vegas. The bankruptcy shouldn’t affect your workouts at David Barton Gym.

Even so, those familiar with the New York-based company might be experiencing deja vu. Almost a year after the fitness chain exited from its Chapter 11 bankruptcy, Meridian Sports Club California LLC has filed. Meridian was the company chosen to form an alliance with the formerly debt-filled fitness business.

On Oct. 16, Meridian, which also uses the name Bodies in Motion, filed for Chapter 11 bankruptcy protection with the Central District of California’s U.S. Bankruptcy Court.

The David Barton Gym at Tivoli Village in Las Vegas is listed as one of Meridian’s assets in the court papers, in addition to seven gyms in California and one in Hawaii. Meridian’s filing lists $2.08 million in unsecured debt.

Las Vegas-based creditors include Great Wash Park LLC, owner of Tivoli Village, which is owed $127,793 in rent; and Las Vegas Billboards LLC, which is owed $18,250.

For the David Barton name, this story sounds a bit like one told before.

In early 2011, David Barton Gym filed for Chapter 11 bankruptcy protection under the corporate name of owner Club Ventures Investments with the Southern District of New York and exited by December. The gym originally filed to restructure $65 million in debt and to partner with the California-based Meridian Sports Club. As a result of the restructuring, Chuck Grieve, who runs Bodies in Motion and Meridian Sports Club, became chairman of Club Ventures. David Barton remained CEO.

Today, nine clubs operate under the David Barton Gym moniker, spread throughout New York, Miami, Chicago, Seattle, Las Vegas and Los Angeles. Monthly membership dues cost a whopping $150. Under the terms of the alliance between the two clubs, Meridian opened the Las Vegas location at Tivoli Village under the David Barton banner in March, six months after its originally scheduled opening date.

In case you’re not familiar, David Barton Gyms aren’t your run-of-the-mill workout clubs. No, they’re a bit like walking into a popular nightclub, complete with DJs, glitzy decor and throbbing music. Barton’s New York clubs cost an average of $11 million each to build out, and no expense was spared in obtaining custom-made art for the spaces.

"David Barton gyms have always been positioned as upscale clubs with an unusual modern design. It’s always been known for its personal training services," said Rick Caro, president of consulting firm Management Vision, which analyzes the fitness club industry.

In fact, Caro noted the club tends to attract consumers who will purchase multiple personal training sessions per week.

Rivian Bell, spokeswoman for David Barton Gym, said the Las Vegas location is doing "very well." During its bankruptcy, the David Barton Gyms operated with no interruptions, and clients should expect the same during the Meridian bankruptcy, she explained.

To be clear, Meridian and David Barton are separate companies. Meridian holds the lease to the David Barton Gym inside Tivoli Village.

The companies also plan to open more David Barton Gyms in the future, but nothing that the company was ready to release yet.

In terms of the companies’ back-to-back bankruptcies, Caro said, one company filing bankruptcy twice in a two-year period isn’t unheard of, but it’s rare. Bally Total Fitness did it and emerged from its reorganization "just fine."

"In many ways that might have been a good strategic move on their part," Caro said.

The fitness industry overall has seen membership increases each year since 2009, according to data from the International Health, Racquet and Sportsclub Association. U.S. membership at fitness clubs totaled 51.4 million at the beginning of 2012, up from 2010’s 50.2 million membership count.

The number of clubs, too, has increased. In 2011, there were about 29,960 health clubs in the U.S., up from 2010’s total of 29,890. Total 2011 health club revenues were $21.4 billion.

"The interesting thing for the industry is that it’s rebounded really well from early recessionary times," Caro said. "This is a very unusual event given the fact that most of the clubs are doing well. This is clearly the exception to the norm."

Contact reporter Laura Carroll at lcarroll@review journal.com or 702-380-4588.

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