Bally Fitness files Chapter 11 for the 2nd time in 2 years

Bally Total Fitness Corp. filed for Chapter 11 bankruptcy protection on Wednesday for the second time in less than two years, hindered by debt and limited refinancing options amid the credit crunch.

The Chicago-based gym operator, which has clubs at Union Park Center in Midvale and on Parley's Way in Sugarhouse, will use existing cash reserves to continue operating. Bally, which again filed in the U.S. Bankruptcy Court for the Southern District of New York, plans to sell itself or reorganize under Chapter 11.

Early last year, faced with more than $800 million in debt and $45 million in cash, Bally defaulted on its debt. The company's shares were delisted from the New York Stock Exchange for failing to meet minimum price and market capitalization requirements. Bally also was delinquent in filing its 2006 annual report because of errors in historical member data.

Bally then filed for Chapter 11 in a prepackaged bankruptcy plan that helped simplify the process under the control of Harbinger Capital Partners Master Fund I Ltd. and Harbinger Capital Partners Special Situations Fund LP, which invested about $233.6 million in exchange for Bally's common equity. It emerged in the fall of 2007 as a private company.