In-Shape operated more than 60 health clubs throughout California prior to the outbreak of COVID-19.  As a result of the pandemic and the state-mandated restrictions imposed on its clubs, the company was unable to service over $70 million of funded debt or make lease payments on its club portfolio.  Chilmark was retained as financial advisor to In-Shape to run a marketing process and to provide financial advice for resolving its liabilities.

In-Shape successfully utilized the Chapter 11 process to obtain much-needed financing, exit underperforming locations, achieve improved lease economics on its retained club portfolio, and effectuate a sale to a new investor group.  The transaction allowed the company to continue as a going concern, and preserved hundreds of jobs.

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Over the course of our engagement, our services included:

  • Assisting management with preparation of a business plan and projections
  • Preparing marketing materials
  • Running a pre-petition marketing and sale process, in which we contacted over 160 strategic and financial parties to gauge interest in the company
  • Facilitating a sale of the company’s pre-petition credit facility to a third-party investor, which paved the way for the buyer of that debt to provide debtor-in-possession financing and serve as the stalking horse bidder
  • Negotiating key terms of the debtor-in-possession financing and asset purchase agreement with the lender and stalking horse bidder
  • Evaluating the company’s pro forma club portfolio and assisting with landlord negotiations
  • Assisting management with cash flow forecasting and reporting requirements
  • Interacting with the unsecured creditors committee during its investigation of matters including the pre-petition marketing process, the insider status of the stalking horse bidder, and other potential claims that could be pursued. As a result of its investigation, the committee endorsed the fairness of sale process and provided support for the sale

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