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Eddie Lee

Ng Kang-chung

The firm tasked with managing the shuttered California Fitness gym chain has confirmed that the troubled company owes more than HK$100 million to former members and employees and is still looking for buyers.
Accountancy firm ShineWing, whose continuing appointment as provisional liquidator was approved by the High Court on Monday, said the debts mainly comprise pre-paid membership fees.
“The amount hasn’t increased after the chain stopped signing up new members,” Terry Kan Lap-kee, from ShineWing, said outside court.
JV Fitness, the parent company of California Fitness, had about 64,000 members and 700 employees before it closed all its 12 outlets across the city last month.
Troubled gym chain California Fitness shuts down all Singapore locations
The cash-strapped gym chain had lost HK$117 million over the past 2 1/2 years and is currently facing a winding-up petition filed by its former owner Wong Ping-kuen, who sold the gym chain to his brother Wong Lun.
The petition will be heard by the High Court on August 31.
Kan said the chain’s members, as unsecured creditors that did not hold security, were unlikely to get a refund.
Should the firm be wound up and claims relating to debts were dealt with, its secured creditors and former employees, who were not getting paid, would be given priority, he added.
While the company was still in talks with at least four potential bidders, according to the provisional liquidator, it remained uncertain whether the eventual white knight would be willing to shoulder the responsibility for compensating customers.
Kan noted that various parties from Hong Kong, the mainland and Southeast Asia were still interested in the gym chain.
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But the group’s debt problems had got in the way of a possible agreement, he said.
Kan declined to disclose details about JV Fitness’s current financial situation, but said the group still owed wages to its former staff.
It had earlier paid a total of HK$4.4 million to about 500 former employees, with each being given HK$8,000.
Meanwhile, at Leap, a brand under JV Fitness, employees and members were allowed to return to collect their personal items on Monday, according to schedules announced by the provisional liquidators.
A staff member said only about 20 of employees and members were expected.
During a Post visit to the Kowloon Bay fitness centre on Monday, employees were seen packing items. At the main entrance, there were security guards barring unauthorised persons.
One of the employees, who declined to disclose his name, said: “The HK$8,000 cheque has been received. But I have no high hope about getting the outstanding salaries. I hope the government can speed up its work and grant us payments under the Protection of Wages on Insolvency Fund.”
“Even if there is a new buyer, they say the chance for staff to get back the owed salaries in full is slim. So, it is bad luck,” said he, who claimed he had worked there for more than a year.
The fitness centre had been in operation for about three years.


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California Fitness

Shuttered gym chain California Fitness owes ‘more than HK$100 million’ and yet to find buyer

Former staff from California Fitness look unlikely to receive all that they are owed. Photo: David Wong

News

Hong Kong

Law and Crime

Former staff look unlikely to receive the full wages they are owed, even if a buy is found, provisional liquidator says
