Hallworth rules out Total Fitness CVA

WILMSLOW-based gyms business Total Fitness has said that it is “definitely not” looking at a Company Voluntary Arrangement (CVA) process as part of its restructuring.

Chairman Graham Hallworth has said that while the 20-strong chain of gyms remains in dialogue with its landlords about its rent levels – some of which are way above the market average – the company has no intention of using a formal CVA process to shed liabilities, despite reports which suggested that it might.

“It’s true that we pulled out of a club in Lancaster last week, but that was just because we couldn’t agree terms with the landlord.”

Mr Hallworth said there were extenuating circumstances surrounding the closure of the Lancaster property, which had been owned by a group of South African property investors but was subsequently repossessed by a bank.

Similarly, the closure of its three Irish sites last week was as much to do with the “desperate” state of the Irish market as the unwillingness by landlords of the three trading sites at Castleknock, Malahide and Sandyford to engage in talks about lowering its rents.

“As a director, you have to look after the creditors of that particular company – of which there weren’t all that many anyway – rather than take a group view.”

Hallworth is a turnarounds expert who became chairman of Total Fitness following a pre-pack administration deal last October. Hallworth and his management team paid £11.9m for the Total Fitness business and were backed by private equity firm Barclays Ventures.

He said that the restructuring exercise embarked upon since had looked at all of the business’s overheads – of which rent is a substantial part.

However, he argued that there is no need for it to engage in a formal insolvency process.

“This is not like JJB,'” he said. “We’ve only got 20 sites so we can talk to the landlords and work with them.”