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BowFlex Inc. confirmed on Tuesday, March 5, that it filed for Chapter 11 bankruptcy protection at a court in New Jersey. The company revealed it is selling its assets worth $37.5 million and struck a buyout agreement with Johnson Health Tech Retail Inc. for the acquisition.
BowFlex said the fitness and wellness brand agreed to buy its assets in cash. The company shared it was also able to secure $25 million in debtor-in-possession financing so it can continue to operate while paying for its financial obligations as it undergoes bankruptcy proceedings and sale.
Decline of the Business
Axios reported that BowFlex’s business collapsed as Americans started losing interest in cardio equipment. This resulted in a slowdown in sales, but expenses are going up.
Most people changed their lifestyles during the pandemic and have shifted to new workout routines. As a result, the home fitness industry is experiencing slumping sales as its equipment is no longer popular. This explains why many firms in the industry, like Peloton, are also struggling and fighting to avoid bankruptcy.
Approval for Chapter 11
BowFlex is seeking the approval of the proposed transaction under Section 363 of Chapter 11 in the U.S. Bankruptcy Code as the last resort to save the business. The approval will allow external interested parties to bid and forward higher or better offers. It should be noted that the transaction is still subject to approval by the Bankruptcy Court, customary conditions, and others that may be required by law.
“For decades, BowFlex has empowered healthier living and enabled consumers to reach their fitness goals with our innovative home fitness products and individualized connected fitness experiences,” BowFlex’s chief executive officer, Jim Barr, said in a press release. “As a result of the post-pandemic environment and persistent macroeconomic headwinds, we conducted a comprehensive strategic review and determined this was the best path forward for our Company.”
The CEO said, “We are fortified by the potential partnership with Johnson Health Tech and encouraged by the multiple parties that have indicated an interest in bidding for our Company. Our goal is to maximize value for our stakeholders through this process.”
Photo by: Jelmer Assink/Unsplash
