AllStar Fitness bankruptcy: Cancellation sought for 2,100 prepaid contracts

March 9, 2013 at 10:54 pm | In Allstar Fitness bankruptcy, West Seattle businesses, West Seattle news | 72 Comments

By Tracy Record
West Seattle Blog editor

The newest development in the AllStar Fitness Chapter 11 bankruptcy and proposed sale: We heard today from multiple club members who reported receiving a copy of these court documents for a motion asking the federal bankruptcy judge to allow the cancellation of contracts purchased before the bankruptcy proceedings started last August.

Other court documents we have since obtained online say that would mean a cancellation of more than 2,100 contracts for the North Delridge club.

Those documents explain that Chapter 11 bankruptcy trustee Richard Hooper believes:

… the Club’s balance sheet has been hampered by the Debtor’s longstanding practice of selling long-term membership as significant discounts. A practice which the Trustee ceased in the interim period of his appointment. It was often the case that the Debtor would offer members reduced monthly rates in return for prepaying 6 or 12 months at a time. The Debtor would further discount these pre-paid memberships by offering an additional 6 or more months free of dues as an additional incentive for prepaying the already reduced rate. As sales of these prepaid membership slowed, the Debtor’s ability to meet its ongoing obligations suffered greatly. It appears from the Debtor’s financials that it relied heavily on these prepayment to meet operational and other needs…

The court documents say the trustee does want to:

(1) assume and assign to the buyer the contracts of those members on month-to-month contracts and those members on prepaid long term memberships who purchased those membership AFTER the start of this bankruptcy case on August 27, 2013, and (2) to reject and terminate the contracts of the remaining long term prepaid members upon the sale of the Club to the buyer. The Trustee believes that the proposed sale and assumption/assignment and rejection of contracts is in the best interests of the estate and its creditors because (i) this is the highest and best offer received by the Trustee to date, and (ii) the Club is currently unable to fund its ongoing operations and the costs of these proceedings.

2013 is what the document says, but the case actually started in August 2012. One member – who bought memberships just weeks before the bankruptcy filing – wrote, “A number of us will lose a substantial amount of money if existing prepaid memberships are terminated by the court. Longtime members of the gym, my partner and I purchased three-year membership renewals (the offer: pay for two years, get another one free). … Is it really too much to ask that the new owner honor existing memberships until they expire — if only as investment in future loyalty and to build goodwill and positive word of mouth in the West Seattle community?”

Meantime, the additional court document we downloaded tonight has details on proposed sale terms – including:

The Buyer proposes to purchase the Transferred Assets for a purchase price of $75,000 pursuant to the terms of the Agreement. Title to the Transferred Assets shall be conveyed without warranty as to title after the Trustee obtains an order from this Court approving the sale free and clear of all liens. As part of the Agreement, the Buyer will assume all of the month-to-month memberships in good standing as of the entry of the Sale Order, as well as all post-petition prepaid Club memberships listed on Schedule 1.1(b) (the “Assigned Contracts”). The Buyer will not be assuming the pre-petition long term member contracts and the Trustee will be rejecting these contracts (the “Rejected Contracts”).

It is pointed out in that document that the current club owners do not own the real estate, so in addition to the expense of buying the assets, the new owner has to negotiate a lease.

The documents say a hearing is planned at the federal courthouse before Judge Karen Overstreet at 9:30 am March 22nd; the sale, to a company owned by former Seahawks player Sam Adams, will be approved, the documents say, if nobody challenges it.

Another hearing set for April 5th – mentioned in the document members just received – is aimed at seeking permission to limit hearing notices from hereon out:

The Trustee is also seeking an Order from the Court to limit his obligation to provide all members and creditors notice of future motions and hearings in this case because of the significant expense of such notices, the Club’s inability to fund its ongoing operations and the cost of these proceedings, and the high likelihood that unsecured creditors will not receive distribution from this case. The Trustee is proposing that he only be required to provide future notices to: (1) all creditors appearing on the Debtor’s schedules; (2) those persons filing proofs of claim on or before April 5, 2013, and (3) those persons filing requests for special notice on or before April 5, 2013.

The court documents include instructions on when and how to send letters challenging either of the above, if you are interested.

Meantime, we’ve been trying to reach prospective new owner Sam Adams for comment (even before this development) and will continue to follow up as the case, and sale, proceed.

SUNDAY, 10:30 AM: Just talked with Sam Adams. He says he expects to honor “99 percent” of the 2100 aforementioned contracts but not those he described as “illegal” – very-long-term contracts (3 or more years, he thought) including those that resulted from investment money given to the longtime owners as they proposed a new club on the Eastside. Separate story to come within a few hours with details from our conversation, including Adams’ plans to renovate what he confirms will be renamed West Seattle Athletic Club.

SUNDAY, 9:31 PM: Here’s the link to that story.

72 Comments

  1. well…that sucks…

    Comment by Santa — 11:28 pm March 9, 2013 #

  2. Wow, feels weird to be one of the lucky ones – I renewed in Oct so I guess my prepaid membership will be honored. I can understand the new owner not wanting to take on some much old debt but it’s bad PR to not honor those who renewed prior to August 27. Many of us have stuck by this club year after year and by potentially losing members, the new owners have an uphill battle to retain and grow membership.

    Comment by Anna Eileen — 11:49 pm March 9, 2013 #

  3. Isn’t cancelling contracts in violation of state law? I thought that due to the shady practices of Hartz Athletic Clubs, laws were enacted to protect memberships.

    If my membership is cancelled, I will never go back. They will lose lots of people if they shaft them.

    By the way, the court document has a date of August 27, 2013. Yes – 2013! So the court document is in error.

    As for mailing out notices, at probably $0.75 each for printing and postage, that’s probably less than one hour of their high paid lawyer fees. Sound like they are being pretty cheap and do not want us to know what is going on.

    I paid membership with a credit card. So i will file a claim with Visa if my membership is terminated.

    Comment by P Lajko — 1:09 am March 10, 2013 #

  4. So just to clarify, anyone who got a prepaid membership AFTER August 27th 2012 (hey that’s my birthday :) will get to keep it?

    Comment by David — 1:38 am March 10, 2013 #

  5. I’m assuming that Sam Adams is not affiliated with LA Fitness. The DM at LA Fitness says they are opening up a club in west Seattle within the next year. It may be a good business practice to work with the pre-paid members in general, but also given future competition.

    Comment by Danelle — 5:50 am March 10, 2013 #

  6. Wow, this is outrageous! I have been a member for over 5 years and renewed my long term contract mid-summer last year. I have stuck with this club despite the decline in quality. This kind of decision can only lead to a loss for the new owner. Right now if he allows those with long-term contracts to finish their contract he’s not really losing anything. But if he terminates there will most likely be a large group who refuses to renew at All Star and finds a club with better service. If I lose out of membership that I’ve paid for, I will not be back, and I’ll be spreading the word far and wide.

    Comment by CE — 7:17 am March 10, 2013 #

  7. The new owner will need to make a significant financial investment to get this former, long time family membership back. Mold in pool, family changing room swollen doors and mold, staff training on customer service, heating the pool, etc.

    Comment by amy — 7:36 am March 10, 2013 #

  8. Correct me if I’m wrong, but this seems like a BAD business move. If the new owner does not honor the existing contracts then doesn’t he run the risk of losing over 1/3 of the paying customers? I’m in danger of losing my prepaid contract and I will not be in the mood to sign a new contract after having lost hundreds of dollars. In this day and age of online reviews, social media, etc. seems like business owners need to be really careful with customers or they risk being burned at the stake.

    Comment by kate — 7:45 am March 10, 2013 #

  9. I am glad I bailed out on All Star. I could tell by the poor condition of the mens room and many broken machines, it was headed to bankruptcy. If they cancel 2100 contracts, they will never return. That has to be a significant core of the membership. A foolish move on the new owner’s part.

    Comment by MrB — 7:54 am March 10, 2013 #

  10. Fortunately, I’ve been a month to month customer. I hope my monthly fees won’t go up too much. I also hope they put more money into refurbishing the gym. I like working out there, but the place is showing some wear and tear. Thanks for explaining why such a hugely popular gym was going bankrupt.

    Comment by Amy Thomson — 8:07 am March 10, 2013 #

  11. I received my bankruptcy letter yesterday. I guess I’m thankful that my membership expires in August, I’m not losing too much then.

    Comment by Laura — 8:19 am March 10, 2013 #

  12. Well, I’m not one of the “Lucky ones.” They still owe me for another year. I can say absolutely that if I feel like I’m treated unfairly during this transition that it will make a big difference when it comes to renewal time. The new management has the choice of not alienating the existing members and creating enough goodwill that folks who are still there will continue–or they can anger enough folks that they will take their business elsewhere. I really think it is in their best interests (and mine) to keep us happy.

    Comment by yacman — 8:33 am March 10, 2013 #

  13. We as a community need to figure out a way to make our voices heard. Leaving loyal members in the dust should not even be a choice! Perhaps a petition that we could bring to those court hearings would help?

    Comment by klg — 8:34 am March 10, 2013 #

  14. Myself and my husband have been long term members. I am very upset that the new owner isn’t even considering honoring our memberships. I understand this is a bad situation, but on the back of my contract it does say if the gym cannot find me another gym within 20 miles I will get a refund. This is a signed legal document as are the court proceedings. I am very interested in pursuing further legal action. Anyone else interested?

    Comment by Emily — 8:35 am March 10, 2013 #

  15. It’s not clear if the plans would be to cancel the contracts completely, or just the free extended months?

    Comment by Joy — 8:37 am March 10, 2013 #

  16. Well thats one way to start a boycott. Come on Sam Adams, step up to the plate and treat “your clients” with a little more respect, eh?

    Comment by JoonMoon — 8:40 am March 10, 2013 #

  17. All members need to request a new notice be sent with the correct YEAR (so sloppy to get this wrong) stated for contracts to be awarded. Otherwise it would seem that technically no contracts need be honored…

    Comment by Susan long — 8:56 am March 10, 2013 #

  18. The stance that the new owners are taking really make a statement to the west Seattle community: “we don’t give a %^&*# about you or care about your business”. This is a very telling precursor to what type of Stewards they will likely be of the gym. Same ol’, same ol’….

    Comment by SRoss — 9:03 am March 10, 2013 #

  19. buyer beware..

    Comment by toodles — 9:03 am March 10, 2013 #

  20. When I renewed for the year last July I felt the offer of an additional 6 month membership for paying for the year up front was too good to be true. I understand the situation that the new prospective owner is in. I would not have a problem with them honoring the year that I paid for. They can have their additional 6 months that was thrown in as an incentive. WS is a small community. The reputation of the new owner is going to be bad from the beginning if he doesn’t do something for the existing members. Unfortunately there are not a lot of choices of gyms in WS if you use the pool. I for one will NEVER agree to a one year commitment with this facility in the future. I’m sad because I expected in my opinion a more “reasonable” resolution in making this facility solvent.

    Comment by Irish — 9:04 am March 10, 2013 #

  21. Shouldn’t they at least give the “terminated” members the value of the amount they paid? (So they just lose the free, promotional period). The membership is almost 7,000 so ti’s won’t really make a huge impact (2,000) but it would be nice to keep folks happy! LA Fitness will be a nice new facility but can never compete with the Personal Training and classes because they pay their employees poorly and require less certifications to work there.
    This is a court/ business decision and I hope people understand that. This club needs to come back to life tor this community! It’s an awesome gym!!

    Comment by concerned — 9:05 am March 10, 2013 #

  22. Danelle – LA Fitness is the only business tenant now slated for Spruce, the project to be built on what is otherwise known as “The Hole” at Fauntleroy/Alaska/39th (under former ownership, that space was to have been Whole Foods, but that was canceled in 2010, and last year WF was announced as anchor tenant for the bigger project across the street). They are supposed to start construction soon, but it’s part of a development that also includes ~200 apartments and this size of development has tended to take about a year and a half to complete. I renewed my inquiries last week about their timetable. Sam Adams has no affiliation with them that I know of; he owns a chain called Oregon Athletic Clubs which includes a branch in Tacoma.
    .
    Joy – I have linked the legal documents in the story, obtained online from the federal court case records. One document is the one that, according to scans I received from several of the readers who e-mailed us yesterday, is exactly what was mailed to members. The other one goes into more details, including the note that 2,100 contracts would be what the documents propose to be “rejected contracts.” Click the links and you will get the PDFs of the complete documents so you can read for yourself. It does not list a date of proposed termination nor whether any sort of counteroffer might be made to members – we hope to reach the trustee tomorrow, while we are also continuing to seek comment from the prospective new owner. – TR

    Comment by WSB — 9:10 am March 10, 2013 #

  23. What a slime-ball. Why would anyone want to give their business to them after a move like this?…even if you are one for the lucky ones? I know a trusty gym with a great reputation, solid facilities and maintenance, and really nice people- the YMCA just up the hill. I recommend it!

    Comment by Nwmama — 9:22 am March 10, 2013 #

  24. Before too much vitriol is hurled at the new prospective owner, please note that the person running the show right now, by appointment of the court, is the bankruptcy trustee, and the court motions depict this as his recommendations, to keep the business from completely shutting down. The existing contracts are obligations made by the ownership that has declared bankruptcy. Right now, the new owner has no formal role except that he has made a purchase offer, which would have to be approved by the bankruptcy court.
    .
    If you read both documents – which I would, if I were a member (and as the one that was sent says, if you have a lawyer, have your lawyer read it to make sure you understand the proposal and your rights to challenge it) – in one place it’s noted that the trustee believes if the sale doesn’t go through, the club would close completely or the bankruptcy would switch from Chapter 11 to Chapter 7. Also, if you have the documents you signed when you paid for a membership, go read “the fine print” and see what if anything it says about various circumstances that could transpire.

    Comment by WSB — 9:42 am March 10, 2013 #

  25. We have been loyal AllStar Fitness customer for more than decade. We have enjoyed our time there but agree that the quality of the equipment and cleanliness has severely declined over the last year. We will lose only about a month on our prepaid contact if the sale is approved; however, we will still take our business elsewhere if that happens.

    Comment by Paul — 9:59 am March 10, 2013 #

  26. If you are in the 2100 who will be affected, join me in writing a letter to the judge. Even if you’re not and you think this is a bad business tactic, write a letter. It may have no impact whatsoever, but writing about it here certainly won’t let those who have some authority in the matter know how you feel.

    Letters must be RECEIVED (not postmarked) by March 20. Send it as soon as possible if you are joining me in protesting the cancellation of existing contracts.

    Be as vocal as you can on your social media channels. Sam Adams supposedly honored existing Allstar contracts in other buyouts. Why pull this move now? With this location?

    Comment by Jenny — 10:00 am March 10, 2013 #

  27. I too am one of the long-term contract holders, but it doesn’t appear I would lose more than a few months. Got my letter too yesterday. 2 thoughts: 1) I 2nd the sentiment here that new owners will need to treat us all well or there will be widespread rebellion and lots of mudslinging on social media towards them. 2) It does appear that the trustee is going this route to avoid losing the sale and total meltdown. That said, I believe that we, as a collective group, have a legitimate legal claim to the current owner’s assets (i.e., refunds for our contracts) if they are in chapter 11. But, I’m not a lawyer. Just a thought.

    Comment by Mike N. — 10:05 am March 10, 2013 #

  28. If my pre-paid membership is not honored I will be very upset. I am already upset at the conditions of Allstar. Hopefully the new owner will clean the place up- disgusting! Brown water in the hot tub??? Mold in the showers?? Broken tile, and no attempt at repairs? Allstar is at risk of a lawsuit no matter what!

    Comment by Megan — 10:26 am March 10, 2013 #

  29. Just got a call from Sam Adams (who we had been trying to reach for a while). He had a lot to say and I will be writing it up separately as soon as I can, within a couple hours. He says they intend to honor what he believes will be most of the 2100 contracts – except for the ones he calls “illegal” which he says stretched out beyond two years or so – he in particular singled out contracts that people might have received in exchange for investing certain amounts in the Allstar owners’ proposal for an Eastside club. We also spoke about his plans for renovations, new equipment, etc. More to come – it will be a separate story, and I will link it here when done – TR

    Comment by WSB — 10:27 am March 10, 2013 #

  30. West Seattle YMCA is just up the hill, and members have access to ALL Y’s in Greater Seattle area, including Fauntleroy, Downtown, and the new-ish Matt Griffith.

    Comment by kas — 10:32 am March 10, 2013 #

  31. Glad I chose to go month to month after my long term membership came up last summer. The place is so dumpy that I figured I might want to make a quick getaway.

    But anyway, don’t all “globogym”-type gyms offer contracts like this, where you pay less if you pay up front and for the long term…?

    Comment by peeb — 10:43 am March 10, 2013 #

  32. My contract was up this month. I am so glad I didn’t take their 6 month free offer in December, which I thought was a little early for a March renewal. Thanks to WSB for covering this story early. I knew not to jump at the offer. When my contract expired this month, they made us buy 2 months worth upfront. FYI, they said they were not selling long term contracts at this time.

    Comment by Stu — 10:55 am March 10, 2013 #

  33. So infuriating. Reminds me of the early 90s when clubs ripped people off right & left through their contracts and access to bank accounts.
    I learned quickly (and from being in that industry) to never pre-pay for anything and allow a business to make money off your money prior to receiving the product or service.
    Good luck guys. Keeping our fingers crossed.

    Comment by WTF — 11:09 am March 10, 2013 #

  34. Kudos for the excellent (as always) investigative work, WSB.

    Sam Adams’ statement gives us some hope, although I’m concerned about our three-year membership contract (we paid for two years, got one year free) being termed “illegal.” It was simply one of two options in our usual membership renewal offer, and we did not invest in any All-Star Fitness club.

    Comment by Bill — 11:18 am March 10, 2013 #

  35. I’ve had bad experiences with a variety of prepaid contracts. Whenever you enter into one of these you are gambling that the business will be around for the life of the contract. Many unscrupulous businesses sell cheap pre-paid contracts for service just to get their hands on some quick cash. Then they declare bankruptcy and split. Contract holders can sue in bankruptcy court, but what usually happens is that self-appointed class-action lawyers take a large share of the remaining assets, while the contract holders get pennies on the dollar.
    .
    The lesson: Avoid pre-paid contracts.

    Comment by DBP — 11:30 am March 10, 2013 #

  36. What i find alarming is that the legal documents that the WSB has linked say that the “Buyer does not wish to assume obligations under the remaining long-term prepaid member contracts of the debtor (“rejected contracts”)[Section E]. If that is the case, then why is Sam Adams saying that he expects to honor “most” of the 2100 memberships? If he really is going to honor these memberships, why not have to honor them legally and only make a motion in the purchase sale to not honor the “illegal” memberships (as he calls them)?

    Comment by Member — 11:41 am March 10, 2013 #

  37. As long term members we too are affected by the “long term contract”. We renewed just prior to August 27, and did pay up front for 2 years to receive an extra year incentive. Thus, we are part of the group that Sam Adams is not confirming? That is crazy! We were the ones that spent the most money, because we believed in All Star! How are our contracts “illegal”?
    Sam Adams, West Seattle is a small community that is VERY tight! Shame on you! You gave us all hope, you were a local hero with the SeaHawks, you are a Seattlite…it really would not serve your new club’s best interest to turn on the West Seattle Community! HONOR OUR CONTRACTS!!

    Comment by kvk — 11:52 am March 10, 2013 #

  38. For what it’s worth…
    FYI – “Allstar Fitness Membership Agreement” Fine Print …”#28 Member’s right to cancel” … “D) Permanent Closure: The member may cancel this agreement if “The Club” permanently closes “The Club” in which this membership was purchased and comparable facilities are not made available within a twenty-five (25) mile radius of the closed facility. Refund: If the agreement is cancelled by reason of closure, the member is entitled to a prorated refund of the fee which will be computed by dividing the membership fee by the number of weeks in the agreement term and multiplying the result by the weeks remaining in the agreement term.”

    Agreement signed/printed 7/8/2012 – purchased a “3 year” membership to start 8/6/2012 ending 8/6/2015. Not sure what the new owner will be proposing if anything for those of us that have these long term contracts.

    Comment by Joe B — 11:56 am March 10, 2013 #

  39. Unfortunately, it looks like my sources have been spot on for the last year.

    Comment by scout 1 — 12:09 pm March 10, 2013 #

  40. I agree that if Mr. Adams honors the yearly part of prepaid contracts and not the “extended” months it would be great and gracious. The facility is in need of work on many fronts but the instructors and programs are the best around. My hat is off to those good folks who have stuck it out through this process.

    Comment by BarbaraH — 12:10 pm March 10, 2013 #

  41. The letter I received in the mail confused me. It says August 27, 2013– did they mean 2012?

    If I purchased after that, does that mean my membership will be honored?

    And if I purchased before that, does that mean my membership will be cancelled without a refund?

    Comment by Molly S — 12:32 pm March 10, 2013 #

  42. Addendum: Do not pin to much hope on Sam Adam making a lot of improvements. My sources tell me that one might want to search for a new gym. I hope they are wrong but I personally am looking.

    Comment by scout 1 — 12:36 pm March 10, 2013 #

  43. I’ll just go wherever Jennifer Cepeda is teaching.

    Comment by Irukandji — 12:57 pm March 10, 2013 #

  44. I thought a contract was contract. Sucks is right. I bit on the January 2012 deal of prepay for 12 months and get 6 months “free”. I feel like I’m paying for B_bs Range Rover…

    Comment by supernova72 — 1:00 pm March 10, 2013 #

  45. Ignore anything said, the *only* things you can believe are what are in the court documents.

    Someone may claim until they are blue in the face that they “intend” to honor contracts but as long as they keep filing court documents asking to be discharged from the same obligations, that’s where reality is.

    Comment by Jim P. — 1:26 pm March 10, 2013 #

  46. Personally speaking, I’m simply biding my time at the club until something better comes along…

    Comment by Amrakx — 1:27 pm March 10, 2013 #

  47. Folks, regardless of the statements Sam Adams may be making to Tracey, write a letter if this affects you or you care about how this is going down. Get your concerns on record with the authority who has the ability to rule on the sale. That’s what matters at this moment.

    Comment by Jenny — 1:51 pm March 10, 2013 #

  48. I was under the impression when one is in bankruptcy the court can nullify a contract if it deems the contract illegal or an expense that outweighs the benefit of the receivership. Again I say why belong to a huge gym when there are nice small local owned places that provide great solutions.

    Comment by coffee — 2:14 pm March 10, 2013 #

  49. Jenny and Jim – Absolutely true. I’m a reporter and it’s my job to talk to key people and report what they say – but in a court case, until something is in writing and/or heard out of the mouth of a judge, the only thing that is a matter of record is what’s in writing. We will continue to cover what’s in writing as well as who says what. The documents linked in this story are the newest on this matter – TR

    Comment by WSB — 2:22 pm March 10, 2013 #

  50. Megan wrote: If my pre-paid membership is not honored I will be very upset. I am already upset at the conditions of Allstar. Hopefully the new owner will clean the place up- disgusting! Brown water in the hot tub??? Mold in the showers?? Broken tile, and no attempt at repairs? Allstar is at risk of a lawsuit no matter what!

    Eric: If that’s actually some of the conditions within this facility, I wouldn’t even have signed a contract in the first place. That’s nasty and completely unprofessional.

    Comment by Eric — 2:23 pm March 10, 2013 #

  51. Most of the comments seem to ignore the economic realities of the current situation. The debtor- owner left the business with a negative balance sheet. The person who is taking it over is hoping to keep it running but apparently does not have the capital to not only “white knight” the facility & fix some of the structural/maintence issues alluded to in the blog but also honor memberships previously purchased. Operational capital has to come from somewhere. I agree that a public relations compromise would be for Mr. Adams to honor that portion of contracts paid for (i.e. my husband & I paid for 2 three year memberships priced at the 2 year rate….thus he would allow us to use the facility for 2 years rather than the 3 we originally expected). However, I understand that is something no bankruptcy court would require him to do & it may also be something he can’t afford to do. The alternative to the court not approving the discharge of the long term obligations is for the club to close and all the people who are complaining would lose their memberships fees and not have the option of using the facility. While there have been issues with the physical maintence of the facilities the instructors and amount of exercise options is amazing. I won’t be happy to lose more than $2200 but I hope I also don’t lose the option to take a variety of great classes at a convenient location.

    Comment by Kathryn — 2:31 pm March 10, 2013 #

  52. I just phoned them to see when I had renewed. Unfortunately for me,it was before Aug 2012.
    I will run in and work out as much as possible before they kick me out.
    I would like to stay. Lets hope Mr. Adams is a straight up guy.

    Comment by LittleBIrd — 3:11 pm March 10, 2013 #

  53. It sounds like the prepaid contracts were basically a Ponzi scheme. They took the money and used it to pay their current expenses without any idea of how to pay future expenses. I don’t think the new owner should be liable for it.

    Comment by keden — 4:35 pm March 10, 2013 #

  54. Being that Sam is an athlete himself, I suspect
    that he realizes the challenges that he would
    present to active members if he did not honor
    their contracts. Even a business/financial
    decision can be made based on the “right thing to do” for employees and members. I hope that Sam can
    show that he’s a kind and honorable man which
    can only benefit his business in the long run.

    Comment by KJKHan — 4:42 pm March 10, 2013 #

  55. It’s the only gym I’ve ever been to where so much of the equipment and space is off limits to folks who aren’t working with a personal trainer. Am I the only one who finds this distrubing? I sure hope this policy changes under the new ownership!

    Comment by Daldart — 5:28 pm March 10, 2013 #

  56. This should be a lesson for these “incredible” opportunities to join a gym …. The price for these upfront payments is faith and confidence in the owner of the business. Month to month may be higher, but carries a higher level of security.

    Mr. Adams is in a tough spot — he needs to repair, cultivate and maintain a business that is, was bankrupt. Hope everyone can walk out of this feeling like they were treated with respect and consideration — Mr. Adams and the respective membership.

    Comment by My two cents ... — 6:19 pm March 10, 2013 #

  57. Daldart…. You are absolutely right in what you say!…. I have been a member since before they broke ground on the Allstar facility…. I have seen more and more gym space, equipment, and staffing go toward the personal training services there. It’s ridiculous….. The new owners have a real opportunity to change the perceptions that are in place currently….. I hope they take advantage of this, and bring the place BACK to being a real gym, with the majority of the pace used for the general membership….. With quality staff members available to EVERYONE. If it maintains the heavy emphasis on costly, elitist, personal training…. I’ll be the first one to switch, once the new LA Fitness opens….

    Comment by DaB — 6:26 pm March 10, 2013 #

  58. For anyone checking back – the “conversation with Sam Adams” story is almost done – as I should have expected, some things this afternoon (unrelated) intervened. Will post the URL here as promised when it’s up. – TR

    Comment by WSB — 6:36 pm March 10, 2013 #

  59. Sam Adams, by not honoring some long-term contracts members made with past ownership, will create a pool of angry people in the community. There is little cost to honoring the contracts while customers who feel wronged will spread their ill will, poisoning the beginning of his tenure in the neighborhood. He will never get those customers back.

    Comment by James Martin — 7:28 pm March 10, 2013 #

  60. I hope that they take a look at the additional annual $100+ ‘capital improvements’ (or whatever it was for) fee. I had not experienced that at another club, why not just charge $10 more per month? It seemed a bit odd. In any event, props to WSB for reporting on this!

    Comment by DiverLaura — 7:58 pm March 10, 2013 #

  61. While not an exact parallel, the failed takeover of the shifty Huling Bro.s dealership by Gee Automotive comes to mind. And one can see how well that worked out.

    The West Seattle community is neither forgetful nor uninformed (in part because of the WSB).

    Comment by Alkene — 8:16 pm March 10, 2013 #

  62. What some do not know, is this is the three All Star gym Sam Adams has take in over on Bob Padgett behalf. I say Sam is not keeping very good company.
    It’s look like Bob Padgett (as in All Star fitness) will not be paying back about 50 members, that payed him $5,000.00 to keep things going.
    You can call it Harts, All Star, or that’s right it maybe now going to be called West Seattle Athletic What a Joke. Members beware somethings don’t change.

    Comment by TEV — 8:16 pm March 10, 2013 #

  63. The Sam Adams interview report is up:
    .
    http://westseattleblog.com/?p=144366

    Comment by WSB — 9:39 pm March 10, 2013 #

  64. I will tell you that Sam is a stand-up guy, and the club is going to be a great place to workout when this much needed change finally takes place. This has been a very difficult process for employees and members, but it’s going to end up for the good!

    Comment by Ramon — 9:53 am March 11, 2013 #

  65. Not sure how the future owner is defining “illegal” contracts. All Star has always given at least 3 months free in return for paying a full year in advance. The new owner must realize that “rejecting” 2100 members is a PR disaster. I am one of those 2100; I will find another club if that happens.

    Comment by Cate — 2:15 pm March 11, 2013 #

  66. Does anyone know what will happen with pre-paid personal training sessions? I pay my membership month to month however purchased the training sessions in bulk for the discount. I’m hoping I don’t lose out on this.

    I agree the facility is in need of a refresh and am looking forward to the upcoming improvments.

    Comment by Nikka — 3:52 pm March 11, 2013 #

  67. When Epicenter bought the Downtown Allstar last year, they honored pre-paid memberships.

    Allstar’s spin classes are great – I hope my instructors stay!

    Comment by anne — 8:52 pm March 11, 2013 #

  68. There appears to be a distinction between what the Trustee intends to do with the long-term contracts and what Sam Adams says are his intentions. Doesn’t the Trustee have more standing with the court? I doubt if Mr. Adams comments posted here on a second-hand basis would have the standing to override what the Trustee does. But I’m not a lawyer. Without more information, I’m inclined to lodge an opinion with the court objecting to the Trustee’s intention to reject ALL of the older prepaid contracts and attach the WSB interview with Sam Adams as indicating a different intention than what the Trustee proposes. I recongize that honoring prepaid contracts extending more than 18 months total (12 paid 6 bonus) might be to much to expect, but at least the paid portion of a prepaid contract should be honored. The language of the Trustee indicates an indifference to the element of Good Will in this business. In spite of the frustration many members have experienced during All Star’s decline, there is clearly still a meaningful amount of Good Will associated with the operation, and Sam Adams is in an excellent postion to benefit from it in allowing the members with reasonable prepaid memberships to continue in good standing. After that, I would expect a good rate of renewal even with what will certainly be higher fees than what were paid previously. If the Trustee is granted the ability to reject all of the prepaid contracts as he requests, I think the Good Will will evaporate.

    Comment by JTB — 9:23 am March 12, 2013 #

  69. And maintaining those pre-arranged (I hesitate to say “pre-paid” as who knows where the money went…) memberships has a very small-to-no incremental cost to the new owner. So what if a few additional long time members use the facility – will it really increase the cost of towels or equipment maintenance?

    Comment by Eddie — 2:55 pm March 12, 2013 #

  70. The only person making decisions or who is In Control right now is the Trustee.

    The prospective (future) owner can do nothing but make suggestions. Sam Adams isn’t to blame here. The Trustee is just doing his job. This whole mess is because of bad business decisions which led to lack of Capital.

    The Trustee is trying to keep All Star Fitness from “slipping under the waves.” He is propping up the club until the new owner can or will take over.

    The Deal is FAR from being DONE.

    Sam Adams could still back out and if he did the club would most likely close forever.

    The sale of the Long Term Contracts at a discounted rate generated Short Term CASH but also are a LONG TERM LIABILITY. (See: “Robbing Peter to Pay Paul.”)

    It’s a very short sighted thing to do, especially at the Buy 1 year get 6 months free. If they hadn’t offered these contract terms the club would have closed long ago.

    Read the documents and then decide what to do if and when the sale goes through.

    Sam Adams can turn the club around if enough people will give him a chance. I think he will be a good owner. If you think LA Fitness is a better deal then go there. Just remember to Google LA Fitness ahead of time to see that they too have had issues with memberships.

    Comment by FF — 5:35 pm March 12, 2013 #

  71. Let it be known that it was AT THE REQUEST of Mr. Adams that the “pre-petition” contracts (i.e., contracts signed before August 27th, 2012) be REJECTED as one of the conditions upon which he would agree to PURCHASE the club. For him to now say that he “intends to honor 99%” of those contract is pure public relations B.S., meant to placate you as you sit on your rights to contest a sale which will kick you out as a current member. If you are one of the 2,100 members (who constitute one-third of the club), you need to OBJECT to the proposed sale IN WRITING, by MARCH 20TH, and attend the hearing on the 22nd if you are able. If Mr. Adams wants to buy the club, he can buy it on terms that will HONOR YOUR CONTRACT and what you have already paid to All Star – -versus giving sheer public relations lip-service which directly contradicts the terms of the sale (i.e., rejecting your contracts) which HE MADE. If you can persuade the Judge to REJECT the proposed terms of the sale, even if that results in a temporary club closure, it CREATES the opportunity for a legitimate and honorable club buyer who will HONOR YOUR CLUB MEMBERSHIP.

    Comment by Eileen — 1:45 pm March 13, 2013 #

  72. I have written a letter to the judge and the lawyers for the Trusttess. For those who do want to write letters, I am posting a portion of what I wrote in case others want to use or borrow my copy:

    “My present contract, for which I have already paid both my dues and the yearly maintenance fee, is not set to expire until March 9, 2014. I understand that when it is once again up for renewal, assuming the Club is sold, those terms may not be offered to me again. My next renewal window would be the appropriate time to end or modify the terms of my membership. Therefore, I am opposed to any sale that would terminate legal membership agreements like mine.

    Mr. Sam Adams, who has been identified as the party interested in buying the club, has been quoted in the local media as stating he intends to honor “99 percent of them” in reference to the approximately 2100 contracts that include terms like mine. He has also been quoted as saying he “thinks” membership terms of two years or more are illegal.

    The terms being requested by the Trustee in the notice I received does nothing to allay my concern that a membership agreement of more than 12 months and equal or less than 24 months will be honored. Therefore, I ask that you require the Trustee to stipulate in greater detail exactly which agreements are to be nullified before you approve this sale.”

    Comment by Jenny — 8:50 pm March 13, 2013 #

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