The Australian-themed Oz Fitness chain based in Spokane, Wash., has filed for Chapter 11 bankruptcy protection for its Billings gym.
On Oct. 22, the company filed to reorganize the finances of the West Park Promenade gym in the U.S. Bankruptcy Court in the Eastern District of Washington. Court documents cite debts that are nearly six times current assets. The Billings business listed assets of nearly $32,000 and liabilities of $186,501.
The gym, on the north side of the mall at 1603 Grand Ave., will remain open during the bankruptcy, said Spokane attorney John D. Munding, who represents the fitness company.
“All the gyms are still operating and intend to continue to operate. It’s truly a re-organization,” Munding said.
This isn’t the first dispute between the mall owner and Oz Fitness, a key tenant. In July 2011, the parties worked out a lease dispute that spawned a civil lawsuit and might have forced Oz to move.
In 1999, 24 Hour Fitness USA Inc., signed a 15-year lease for the space. Five years later, Oz Fitness assumed the lease, agreeing to pay $41,181 per month and $11,562 to cover taxes, insurance and common maintenance.
Bob McDonald, the Seattle-area developer who bought West Park Promenade and is remaking the mall, said the Oz lease was renegotiated a couple of years ago so the gym could upgrade equipment. The current lease has nine years left.
The landlord said he has talked with a California company interested in buying Oz Fitness and said there may be more potential buyers. The bankruptcy filing isn’t an immediate concern, McDonald said.
“I think all their employees are still there. They are open and operating,” he said. “We want to work with them as best we can.”
Meanwhile, McDonald has filed a landlord’s lien against Oz through his subsidiary, WP Shopping Center LLC. The $161,000 lien listed exercise equipment and past-due rents on the 40,700-square-foot facility.
Australian Ian Riley, who won the Mr. Australia bodybuilding contest in 1988, started Oz Fitness 33 years ago. Most of the gyms are in Spokane. One Oz center in Springfield, Ore., was sold last year to a local company, International Fitness.
The meeting of creditors owed money by the Billings gym is scheduled for Nov. 8 in Spokane. Plans to reorganize the Billings club should be filed in January, Munding said.
The Billings gym owes money to about two dozen creditors, including Montana Dakota Utilities, NorthWestern Energy and three personal trainers, according to bankruptcy documents.
Oz Fitness is paid up on personal property taxes on its equipment, according to the Yellowstone County Treasurer’s Office. But the bankruptcy documents show a fee liability to the county tax collector of $106.
Riley could be immediately reached for comment.
Link: