Allstar Fitness bankruptcy: What prospective owner Sam Adams says about contract cancellations and club renovationsMarch 10, 2013 at 8:30 pm | In West Seattle businesses, West Seattle news, WS Health Club/ex-Athletic Club/ex-Allstar Fitness | 62 Comments
By Tracy Record
West Seattle Blog editor
Allstar Fitness‘s prospective new owner Sam Adams says the court documents don’t tell the whole story.
After members of the club, which is in Chapter 11 bankruptcy, contacted WSB yesterday about court documents they’d received, we reported on those documents and other recent filings, which ask a judge to “reject and terminate the contracts” of “long term prepaid members” who bought their memberships before last August’s bankruptcy filing (reported here in October), without otherwise defining “long term prepaid,” but saying that would be about 2,100 contracts.
Even before that, we had messages out seeking a conversation with Adams, the former Seahawks (and other teams) pro football player turned health-club entrepreneur, to find out more about his plans for West Seattle’s biggest fitness club, which he says he will rename the West Seattle Athletic Club.
This morning, he called. He claims that while the court documents say about 2,100 membership contracts are proposed for termination, he intends to honor “99 percent of them.”
Adams’ prospective purchase was announced two weeks ago. Today, he told WSB he expects to take over the club on March 25th, if the sale is approved at a court hearing March 22nd – the hearing mentioned in the court documents received by members. “The first thing I plan on doing is honoring the legal prepaid memberships,” he insisted, while also noting that the court “legally cannot make me honor the prepaid memberships.”
What is considered an “illegal” prepaid membership? we asked.
“Some people gave (the current ownership) money to invest in Allstar, and he gave them lifetime memberships,” Adams said. “I’m sorry, but those are deals they cut with him – they have to talk to Bob (Padgett) about them.”
Adams also mentioned, however, that he believed – but wasn’t certain – two years was the limit of a “legal” membership. In general, though, especially for those who signed a contract “within the past year or so,” he said, “regardless of whether they paid me or not, they paid someone, and it’s the right thing to do” to honor the contracts.
He says he doesn’t know exactly how many people that involves, because “we haven’t fully dug in because we don’t own or operate the club … but I don’t anticipate more than a handful (of memberships will be cancelled).”
Adams had words of criticism for the bankruptcy-declaring ownership and investments he says they solicited; court documents say trustee Richard Hooper “continues to investigate the financial affairs of the Debtor and believes there may have been a number of preferences paid and fraudulent transfers made during the course of the Debtor’s operation of the Club, both pre and post-petition.” Adams said that he “took over several (of the ownership’s) clubs” and says that at those facilities he saw “advertisements for people to invest in (another proposed club), a $5,000, $10,000 membership … three years out, five years out, ten years out.”
He said he believes that in particular, people who “bought a membership within the last year (are) safe,” while reiterating that they won’t know for sure which memberships are “legal” and which are “illegal” until “we get into the system.”
He expected that would be around March 27th, and said that members would be contacted then.
Meantime, after some discussion of the membership-cancellation situation, he moved into his plans for the club. “We want people to come back,” Adams declared, saying that membership is down. “We are going to spend a significant amount of money remodeling the building. It’s not an investment in the building, it’s an investment in the community, (for) a topnotch place. We’re not a big franchise – we’re a locally owned health club for local people.” (Adams lives in Kirkland.) “It’s going to be more than an average health club, more than a 24-Hour or L.A. Fitness. People in West Seattle want ‘more than average’.”
He promised not only an upgraded facility but also “special classes” and new equipment – “going to replace the older equipment with some newer lines … some astroturf area for some more-modern … exercises. We’re going to add a ton of equipment, but not so much you can’t move; we’re going to strategically place it so you’ll be able to work out. You’ll come in and see a nice weight room; we’re going to pull out some of that old carpet …”
He also promised to clean up “all the wet areas … right now I feel like I have to take a tetanus shot to walk through there, and I don’t think that’s cool for the members.”
While he says the swimming pool – which was closed for a while recently under current management – might have to shut down for an unspecified time to be cleaned up, he does not anticipate having to close the club itself for any of the promised remodeling or upgrades. “It’ll be a little intrusive at times,” he allows, but he expects much of the work to be done at night, noting that he himself “doesn’t sleep very much.”
“I got into this business to give people a comfortable place to work out,” he added. “Our first line of business is to contact members and welcome them back, to let everyone know we want people to come back to the club.” He said he realizes “there are a lot of people who left and are unhappy.”
In fact, Adams said, he had been trying to “take over and buy” the West Seattle club for two years, adding “they didn’t have to go through this (bankruptcy).”
We asked him what happened with the downtown club that he no longer owns, mentioned by commenters in some of our previous coverage. He replied that he used to have a business partner with whom he split; that partner, he says, was more interested in “the downtown market” and Adams himself “wanted to do more of the community market,” so they parted ways.
Meantime, he believes that West Seattle Athletic Club will “be an integral part of the community … we’re excited about the community, and excited about being part of it.”
First comes the March 22nd hearing, at which Judge Karen Overstreet will be asked to approve the sale, 9:30 am at the federal courthouse downtown; responses to the proposed terms need to be sent in ASAP, according to the documents, which you can see here if you did not receive a copy. (They also mention an April 5th hearing asking permission to stop sending out en-masse notices about proceedings, such as the very notice received this weekend by members who contacted us about it, resulting in our reports; if no responses are received to that, the documents say, the motion may be granted without a hearing.)
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