California Fitness

Financial woes of Hong Kong gym chain California Fitness spread to mainland China with Beijing branch shutting its doors

Branch in the capital suspends business following closures in Hong Kong amid mounting debts and legal action, but gyms in Guangzhou, Shanghai and Singapore still up and running

PUBLISHED : Friday, 08 July, 2016, 2:22pm
UPDATED : Saturday, 09 July, 2016, 12:59pm

The financial crisis facing gym chain ­California Fitness has spread across the border, with the Beijing branch closing its doors on Friday.

A visit by a Post reporter to the gym on Guanghua Road in the capital’s Chaoyang district – home to many foreign embassies – found the fitness centre with its shutters partially lowered.

“The boss has not appeared and the money has yet to come in,” a member of staff said. But she insisted the arrangement was temporary and the branch would reopen as soon as funds arrived.

She told scores of gym users – some of whom only learned of the temporary closure on arrival – that they could suspend their memberships and reactivate them later.

A notice saying the Beijing branch would undergo “internal reorganisation” had been sent to customers by trainers.

The abrupt suspension of business comes after a local California Fitness branch in Hung Hom closed on Monday amid court action revealing the financial peril the chain is in.

The gym’s operator, JV Fitness, had been struggling to pay up to HK$14.1 million in rent for six of its 12 branches in Hong Kong, including mYoga and Leap.

The other two California Fitness branches on the mainland, in Guangzhou and Shanghai, were said to be still running, as are three centres in Singapore.

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But in Hong Kong, creditors queued up to add their names to the list of businesses making claims against the embattled gym chain.

In the latest legal action, the landlord of Kowloon Bay mall MegaBox is suing JV Fitness for HK$2.94 million over rent, licence fees and promotional fees, according to a High Court writ.

Building firm Ping Kee Construction is seeking HK$2.57 million over work at California Fitness’ Mong Kok branch and an mYoga centre underneath it.

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A source close to the matter revealed JV Fitness has about 500 employees and 100,000 pre-paid memberships that could be in jeopardy following the ­issuance of a winding-up petition against the chain last week.

At least one potential buyer, Muay Thai fighter Bryan To Hang-lam, is in talks to acquire the chain.

In total, creditors are pursuing California Fitness for HK$11.2 million, with at least another HK$2.94 million worth of claims expected to be filed. Debts faced by the chain as of last week amounted to HK$130 million, according to the source.

On Thursday a group of employees turned up at the office of the chain’s former director, Wong Ping-kuen, to stage a protest over unpaid wages. The firm has since promised to discuss with banks how it can settle the outstanding amounts.

Wong is said to be in charge of the business, according to the source, but he has reportedly denied that claim.

But he filed a winding-up petition for JV Fitness last week via his company BeSpark Engineering Technologies.

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Amy Hui Wai-fung, chairwoman of the Beauty and Fitness Professionals General Union, which has been helping the workers, said employees had yet to receive their pay. She accused the owner of procrastination tactics, and said the union intended to meet with the employees to decide how to proceed.

A spokesman for the Labour Department said they had received inquiries from an unspecified number of staff members, while the Customs and Excise Department said it had received 185 complaints as of Monday relating to the closure of the Hung Hom branch.