Controversial restructuring plan approved by High Court
A controversial restructuring plan aimed at saving gym firm Fitness First has been approved by the High Court.
The restructuring plan will see rents cut at 34 sites across the country while ten gyms are to close.
Several of the UK’s largest commercial property landlords were behind the legal bid to stop the rent-cutting plan put together to keep the Poole based firm afloat.
However High Court judge Mr Justice Michael Green ruled against the landlords and approved the restructuring plan.
Dominic Curran, assistant director of the British Property Federation, has expressed fears the ruling could lead to other businesses abusing restructuring plans.
He said: “We support the UK’s rescue culture but are concerned that if restructuring plans are abused they can enable businesses to terminate leases and cut rents with little consultation and limited financial disclosure to justify why they are needed.
“Property owners generally have a good relationship with their tenants and reduced or even waived rent during the pandemic to enable businesses to keep trading and protect jobs. Rents have been rebased over the past decade and leases today will reflect current market conditions.
“Restructuring plans should be a tool of last resort and should only be implemented if there is proper engagement and co-operation with impacted creditors.”
Fitness First’s most recently filed accounts revealed a loss of more than £10m in the last financial year. Teneo Financial Advisory was appointed administrator to Fitness First (Curzons) Limited, a company linked to the wider group, earlier this year.
According to reports landlords Lazari Properties 1, M&G Real Estate and the Crown Estate were behind the legal challenge.