A Hong Kong court has ordered the gym chain Physical Fitness to wind up its operations after ruling that the company cannot repay its debts. One branch alone owes more than HK$600 million.
On Monday, High Court Judge Linda Chan directed Physical Fitness’s parent company, Physical Beauty & Fitness Holdings Limited, and its subsidiary, Physical Health Centre Hong Kong Limited, to enter liquidation, according to local media reports.
Physical Fitness had operated in Hong Kong for 38 years. Last September, the chain announced a “temporary closure,” blaming high rents. This came after the city’s pensions regulator warned the company of legal action. The gym owed over HK$3 million in unpaid pension contributions for 740 employees to the Mandatory Provident Fund (MPF) scheme.
At the court hearing, a provisional liquidator reported that all 13 subsidiaries under Physical Fitness were insolvent. Some branches had failed to pay rent, while others carried large contract liabilities.
The court heard that the Tsim Sha Tsui branch’s debt alone reached HK$634 million.
Although the company sold fitness and beauty equipment and other assets worth around HK$200 million, the liquidator said this was not enough to cover the debts.
A creditors’ representative said Physical Fitness owed over HK$74 million to former employees. In total, 374 ex-staff supported the petitions to liquidate the company.
Judge Chan ordered the gym chain to proceed with liquidation. She added that a written judgement would be issued in two weeks.
Founded in 1986, Physical Fitness had 23 branches across Hong Kong and served more than 500,000 customers, according to its website. However, the website was no longer accessible as of Monday.
Since the shutdown last year, Hong Kong authorities have received over 1,400 complaints about Physical Fitness. These complaints involve more than HK$72 million in prepaid fees.
