(Bloomberg) — Hong Kong gym chain Physical Beauty & Fitness Holdings Ltd. received a liquidation order in Hong Kong after the judge said the company is insolvent.
The company’s assets, mainly gym and beauty equipment after adjustments, are worth just over HK$15 million ($1.9 million), Judge Linda Chan said at a court hearing on Monday. That isn’t enough to pay the petitioning creditors, she said.
Large gym chains in Hong Kong face pressure from high rental costs, competition from smaller rivals and a sluggish economy. Physical announced in September that it would shut down after more than 30 years in business, local media reported.
The judge approved two winding-up petitions, one against Physical Beauty & Fitness Holdings and another against subsidiary Physical Health Centre Hong Kong Ltd. The two petitions were heard together in court.
The order can help liquidators “take steps to protect the assets belonging to the holding company and the subsidiaries,” Chan said.
Physical Health Centre Hong Kong owes more than HK$74 million to over 370 creditors, most of them employees, according to the petitioners’ legal representative. Meanwhile, a branch of Physical in the busy Tsim Sha Tsui district has a net liability of over HK$634 million, according to evidence submitted by the provisional liquidator.
Another subsidiary of Physical Fitness is facing a wind-up hearing on Feb. 19, according to the Hong Kong judiciary’s website.
In August, Pure Fitness, a gym popular among bankers and executives in the city, was sued for alleged missed payments of rent and management fees at some of its facilities. It said the following month that it had resolved the dispute with its landlord.
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