Gym serving 2K members from Glenwood to Rifle in receivership over debt issues
A fitness club with some 2,000 members in Garfield County has been placed into court-ordered receivership due to mounting debt, but was still able to reopen on a limited basis this week under the new state public health guidelines.
Steve Reynolds, who works as one of the personal trainers employed by Colorado 24/7 Fitness, was appointed receiver by the Ninth District Court late last month to operate the gyms and related businesses until approximately $500,000 in debt can be cleared.
“It does look to me, with the membership numbers we’ve had for the last two years, that we’re going to be able to pull out of this,” Reynolds said.
The business is owned by a group of investors with John Romero as the majority owner. Gym locations are in Glenwood Springs, New Castle and Rifle, with a separate day spa in Glenwood.
Last year, the company purchased Up the Creek Rafting as a side venture. That allowed some of the trainers to have extra employment during the summer months when demand for personal trainers declines, Reynolds said.
Romero, who is still involved with the day-to-day operations and would resume full ownership of the business once creditors are paid, declined to comment on the situation.
Receivership is an option allowed under Colorado law for creditors to seek payment without forcing a business to file for bankruptcy. It is a lengthy process to get to the point of solvency, though, Reynolds explained.
“With adjustments to some of the expenses that we can tighten up, we estimate we can pay off all the creditors in three to five years,” he said.
Although the recent forced closure of gyms and other businesses due to the COVID-19 outbreak didn’t help matters, the debt situation had been building before that time, Reynolds added. The court process leading up to the receivership had been in the works since November of last year, he said.
Because the company is also behind in its taxes, it wasn’t able to take advantage of the various COVID-19 business relief funds that have been made available, he also said.
Reynolds also addressed a situation where Colorado 24/7 club members were still having automatic payments pulled from their bank or credit accounts after the gyms had to shut down in March by order of state public health officials.
As with other businesses that use auto-payment options, those transactions weren’t stopped, but the amount paid is to be credited.
In the case of Colorado 24/7, that amount will be tacked on to the end of members’ contracts. However, because of the pending court situation, that wasn’t immediately communicated to members, Reynolds said.
“Instead of freezing those payments, we will extend whatever period of time that ends up being at the end of their contracts,” he said.
Though gyms were not allowed to open to regular unscheduled walk-in customers on Monday along with other non-essential businesses in Garfield County this week, those with personal training studios were allowed to open on a limited appointment basis, Reynolds explained.
For the Colorado 24/7 gyms, that means no more than four customers at a time working with a trainer, all with face coverings and employing social-distancing protocols.
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