15 Dec 2018 | Digital editions, magazines, websites, e-zines, handbooks and contract publishing for the leisure industry

Health Club Management issue 11, 2018 is now out!

Blogs:

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Liz Terry
CEO,
Leisure Media

Kate Cracknell
editor-at-large,
Health Club Management

Ian Taylor
CEO,
SkillsActive

Gareth Edwards
Director of Education,
Springboard

John Goodbody
Sports Journalist

Peter Ducker
Chief executive,
Institute of Hospitality

Suki Kalirai
Interim CEO,
SkillsActive

Sam Coulstock
Customer Relationship Director,
Springboard

Leah De Silva
Business development director,
Springboard

Peter Moody
Partner,
Brook Street des Roches LLP

David Stalker
CEO,
ukactive

Charles Wilford
Co-Head, Leisure Team,
Gerald Eve

Confusion in the UK fitness market

24 Jul 2012
by Peter Moody, Partner, Brook Street des Roches LLP
Fitness First looked to offload sites to budget operators keen to snap up the cream but it quickly became clear that operators were better off going direct to landlords.

It's hardly surprising that, when someone receives a 144-page document, it takes a little digesting. And as a legal document, the contents are bound to be somewhat confusing. So it was in early June when Fitness First issued its Company Voluntary Arrangement (CVA) proposal.

The purpose of a CVA is to allow a company to avoid liquidation by reaching an informal but binding agreement with its unsecured creditors, usually involving rescheduling and reduction of debts.

Fitness First's creditors include numerous landlords, at whom the proposal was aimed; to assist it in divesting rental and other liabilities on less well performing and non-core units - a blow to those who had previously seen the operator as a strong tenant.

With more than 60 per cent of landlords affected to a greater or lesser (mostly greater) extent, a ripple of anxiety went through the marketplace - particularly when landlords realised Fitness First's intention was to divest itself of 60+ sites within six months. Despite an attempt to galvanise landlords to vote against the proposal, it was duly passed.

What could not easily have been predicted was the amount of confusion caused by the CVA and its effect on Fitness First, its landlords, other operators, and even on some of Fitness First's sub tenants. Seeing some landlords distrain for rent, despite a moratorium imposed by the CVA, gave the impression that 144 pages was too much to read and, even if they had, no-one had advised on the effect.

Fitness First looked to offload sites to budget operators keen to snap up the cream but it quickly became clear that operators were better off going direct to landlords.

With the CVA approved, landlords were able to control the identity of fresh tenants. Some were even keen to market sites with sub tenants in occupation. What resulted is a frenzy of activity and time wasted by landlords and operators in a squabble over which sites are available and on what terms.

In short, confusion. But, on reflection, how much more calm and effective the activity would be with more attention to the detail of the scheme, and, dare I say it, some more focussed legal advice.



Tags: Leisure Opportunities  health & fitness  property 

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