Eviction hearing next month for West Seattle Athletic Club, which also has filed a separate lawsuit of its ownJanuary 24, 2014 at 4:06 pm | In Allstar Fitness bankruptcy, West Seattle news | 64 Comments
By Tracy Record
West Seattle Blog editor
Routine checks of court files have turned up two new legal actions involving the West Seattle Athletic Club (which took over the former Allstar Fitness location in North Delridge last year) – one in which it’s the defendant, another in which it’s the plaintiff.
First: The club’s landlord H-P Properties has filed an “unlawful detainer” complaint, and what court documents describe as an “eviction hearing” is set for February 11th.
As explained here, this means basically refusal of an order to vacate. According to the court documents, the landlord is owed $386,000 in “back rent and other charges,” including this month; the documents include the lease, which says that after two rent-less months last spring, owner Sam Adams is supposed to be paying $100,000 rent per month right now. The complaint, filed a week and a half ago, includes a copy of a three-day “pay or vacate” notice that was originally dated December 20th.
The complaint is not only against Adams, his company Hollystone Holdings, and the West Seattle Athletic Club, but also names a company called Barratt Leasing. That company, in turn, is being sued by Adams, according to a separate action filed this month, which names Adams as a plaintiff as well as six athletic clubs, including the one in West Seattle. They are suing Barratt Leasing and Allstate Financial Group for breach of contract, accounting, and rescission.
The court documents say Allstate Financial “offers billing services to owners of athletic clubs” and that it was under contract with these clubs, but alleges that Allstate:
“… has failed to make timely and accurate periodic payments to Plaintiffs. On numerous occasions the periodic payments from Allstate Financial to Plaintiffs were late, less than called for under the terms of the agreements between the parties, not wire transferred, made on out-of-state checks that would not clear for several days, or drawn on accounts with insufficient funds. Many Allstate Financial checks to Plaintiffs would be cancelled by Allstate Financial after being deposited by Plaintiffs, which in turn would cause Plaintiffs’ checks to landlords, vendors, and employees to bounce. As a direct and proximate cause of Allstate Financial’s failure to make timely and accurate periodic payments, Plaintiffs were unable to pay required lease, payroll, insurance and utility expenses.
Other allegations made by Adams and his clubs are that Allstate “convinced (them) to enter into subleases for the inclusion of wellness clinics in four clubs” but has not been paying rent for those spaces and currently owes more than $120,000.
As for Barratt, which “is affiliated with and operates in connection with” Allstate, here’s another excerpt from the documents in the lawsuit filed by Adams’ company:
By Tracy Record
West Seattle Blog editor
Some confusion tonight regarding notices sent to past/present members of the former Allstar Fitness club at 2629 SW Andover in North Delridge.
We’ve heard from three people so far who received the notices in postal mail today and assumed they have something to do with current concerns at what has since last March been West Seattle Athletic Club.
The new notices do NOT have anything to do with current ownership.
They are part of the pre-existing bankruptcy proceedings for West Seattle Fitness, the official name of the ownership from the club was Allstar Fitness. You might recall that back before the club was sold to its current ownership, the previous ownership had been going through bankruptcy proceedings (here’s our coverage archive, newest to oldest) and there was some discussion of when members should get notices regarding those proceedings. According to images of the court documents in the new notices, they relate to a hearing December 20th on setting the amounts to be paid to people involved with those bankruptcy proceedings, including the trustee who for a time oversaw the former Allstar Fitness, and lawyers. The notices invite recipients to respond, and note that if no responses are received, the motions might be granted without a hearing.
We just checked the online file for that pre-existing bankruptcy case involving the prior owners, and that appears to be all that is going on (although we urge you to review anything you receive for you reading any legal-type notices you receive.
Separately, after a flurry of e-mails from members in recent days, we have been checking on the situation with the club under current ownership.
Ex-Allstar Fitness, now West Seattle Athletic Club: Update from new ownership, including memberships’ statusMarch 27, 2013 at 12:29 pm | In Allstar Fitness bankruptcy, West Seattle news | 39 Comments
For the first time since the Friday hearing at which a federal bankruptcy judge approved the sale of the former Allstar Fitness, we’ve heard from its new ownership. Sam Adams‘ company Oregon Athletic Clubs is renaming the club West Seattle Athletic Club, as we had reported after speaking with him March 10th, and we now know that company’s president is a former West Seattleite named Don Pak. He has just sent us this notice – which he says will be e-mailed to members as well as posted at the club – with information including the latest on what they are doing about prepaid memberships:
It is with great pleasure that we announce the following:
West Seattle Athletic Club has acquired Allstar Fitness and we are honored to serve the West Seattle community. West Seattle Athletic club (formerly All-Star Fitness) is the newest addition to the Oregon Athletic Club Family, the fastest growing chain of premier destination health clubs in the Pacific Northwest.
What does this all mean to you as a former All Star member?
There will not be any interruptions with your current monthly membership or changes to your monthly rates! This means you can carry on using this great facility as you have always done while also taking advantage of the new upgrades to equipment and services that we have planned.
What do we have planned for your club?
In the near future we will be replacing equipment, increasing services, and refreshing/updating the building. As a part of our new Group exercise (GX) programs, we will be adding classes from the world renowned Les Mills programs! We’re not just focusing on the adults either. At the new OAC, we want to continue and expand our youth programs to provide more options for the entire family! We will be adding amenities to the kids club such as well. The new OAC will be implementing the kidcheck software program to help ensure a safe and easy check in process. Take a look… http://www.kidcheck.com. Our goal is to provide an outstanding member experience to all of our members.
What about pre-paid memberships?
Great News, as promised, The West Seattle Athletic Club will be honoring all prepaid membership that expires on or before December 31st 2014.
If you have a membership that expires after December 31st 2014, please contact us at memberservicesWSAC@oaclubs.com. If we do not hear from you, a representative will be in contact with you to discuss your membership on an individual basis.
What happens next?
To use your new West Seattle Athletic Club membership just come into the club, update your billing and contact information, and enjoy your local neighborhood club. You will be issued a new membership card and hopefully meet some of the new staff members that will be here to help you reach your fitness goals.
We are thrilled to personally welcome you to the new West Seattle Athletic Club and are excited to provide you with a world-class experience. If you have any questions regarding the transition, please contact your club general manager Ramon Vasquez. He is at the club or can be reached at firstname.lastname@example.org. We would like to thank you for being a member.
Yours in Health,
The Oregon Athletic Club team!
This is the latest chapter in what began when the former owners’ company West Seattle Fitness filed Chapter 10 bankruptcy, quietly, last August. After tips from members, we first reported on the situation in November. The club was put up for sale in February, and the sale was approved by U.S. District Court Judge Karen Overstreet last Friday (see the signed court document here). WSB ongoing coverage dating back to November is archived here (reverse chronological order).
(Click image for larger view)
As noted in our Friday coverage of the hearing in which U.S. District Court Judge Karen Overstreet approved the sale of West Seattle’s Allstar Fitness, the court-appointed trustee promised a notice would go up at the club ASAP with an update for members. Above is a photo of the resulting notice signed by trustee Richard Hooper, taken by a member and shared with us via e-mail. If for some reason you can’t read even the larger size of the photo, here is a key passage regarding the status of memberships:
If you are a member who signed and paid for a long-term, prepaid membership contract or prepaid personal training contract dated on or after August 27, 2012, that contract will be honored under its terms by the Buyer.
If you are a member who signed and paid for a long-term, prepaid membership contract or prepaid personal training contract dated before August 27, 2012, your contract will be rejected and terminated as of today. However, the Buyer is in the process of reviewing these contracts and is willing to discuss your continued membership with you. Please bring copies of your signed contract to the club for these discussions. You may have a claim in the bankruptcy proceeding and will receive notice of any deadlines related to the filing of claims.
If you are a member who signed and prepaid for a long-term, prepaid c membership contract dated before August 27, 2012, but the contract renewal date was not until after August 27, 2012, your contract will be rejected and terminated as of today. However, the Buyer is in the process of reviewing these contracts and is willing to discuss your continued membership with you. Please bring copies of your signed contract to the club for these discussions. You may have a claim in the bankruptcy proceeding and will receive notice of any deadlines related to the filing of same.
… West Seattle Athletic Club LLC has asked me to inform you that you are welcome to use the club, regardless of your status above until all of the contracts have been reviewed and it has had an opportunity to meet with you and discuss your individual situations.
West Seattle Athletic Club is what new owner Sam Adams told us, in a March 10th telephone interview, he would rename the club. He also spoke with WSB this past Thursday, and our report on that conversation is toward the end of this story. All of our coverage, dating back to our first report on the bankruptcy last fall, is archived here, in reverse chronological order.
SUNDAY MORNING NOTE: We received multiple messages this morning from people who said the club did not open at its usual 8 am Sunday time and that they waited for quite a while and finally left. We were about to start investigating this when commenter Kate posted just after 9 am that she called and the club IS open now. (Please let us know if at any point later in the day you find otherwise – we always welcome news tips by text or voice, regarding any West Seattle/White Center/South Park news, at 206-293-6302, 24/7, the fastest way to reach us.)
10:57 AM: We’re in the courtroom of federal bankruptcy judge Karen Overstreet downtown, where she has just announced she will approve the sale of West Seattle’s Allstar Fitness to Sam Adams – after a long and rambling hearing – in which she also said she will ask the US Attorney’s Office to investigate current club owner Bob Padgett for not notifying members of bankruptcy when filed last August, among other things. We’ve been tweeting live; details to come here.
11:19 AM: The hearing has ended. The judge expressed ongoing concern for members getting notice, from hereon out, about their rights, including those whose contracts don’t wind up being assumed by the new ownership, and their rights to file a claim in the Chapter 11 case. She asked the bankruptcy trustee to look into a way to point members to a court website where they could read documents and notices. Trustee Richard Hooper also promised the judge that he will be posting a notice at the club this afternoon to notify members of the sale. We will expand this coverage with play-by-play from the hearing as soon as we’re back at HQ.
ADDED 6:21 PM: The rest of today’s story – through the end of the court hearing, anyway (we’re interested in hearing from anyone who might have seen the new owner at the club today, and/or the promised notice to members – your comments and/or e-mail are appreciated):
(UPDATED THURSDAY EVENING with new comments from prospective club buyer Sam Adams, and another “response” document – both updates added at end of story)
By Tracy Record
West Seattle Blog editor
Continuing our coverage of Allstar Fitness‘s Chapter 11 bankruptcy case, there are new developments as the proposed sale of the club’s assets goes before a federal judge downtown tomorrow morning:
More than 50 responses and/or objections to the sale motion have been filed, according to our most recent check of the online docket. We haven’t read all of them yet; most appear to be from individuals, with one exception: GRE 509 Olive LLC.
Its objection involves both the sale and the purchase. You can read it in its entirety here; while we’ve been working on this story, a response has been filed as well – a response saying that if the sale is not approved, the bankruptcy will go to Chapter 7 and the club will close, and had already been on the brink of closing in January.
First, excerpts from the objection:
Allstar Fitness bankruptcy: Sale/’rejected contracts’ hearing Friday; member response deadline WednesdayMarch 18, 2013 at 11:31 am | In Allstar Fitness bankruptcy, West Seattle businesses, West Seattle news | 81 Comments
Continuing our followups on the Chapter 11 bankruptcy and impending sale of West Seattle’s Allstar Fitness: This Friday is the day a federal judge will consider approving the proposed sale of the club to health-club entrepreneur and former Seahawks player Sam Adams. As first reported here on March 9, court documents say that Adams does not want to assume “long-term contracts” from before last August’s bankruptcy filing. He denied that in a conversation with WSB the next day (here’s our March 10th report), saying he expected to honor “99 percent” of them, but so far, the court filings have not changed. This Wednesday, March 20th, is the deadline for interested parties to file responses with the court. As of this morning, the online file includes only a handful of responses to the sale motion, and one response to a separate motion that is scheduled to be heard April 5th – a request that the judge give permission for court proceedings NOT to result in further mass notices.
One WSB’er suggested that in case members missed the mail notification and/or still don’t know whether they are on the list of contracts proposed as “rejected” contracts, we upload the publicly available court documents here. Here’s the one with the “prepaid contracts to be rejected” list – 17 pages holding more than 2,000 names. If you want to file a response to be considered before this Friday morning’s hearing on the sale motion – which includes the “rejected contracts” list – this court document originally included in our March 9th report explains how to do so by the Wednesday deadline.
Allstar Fitness bankruptcy: What prospective owner Sam Adams says about contract cancellations and club renovationsMarch 10, 2013 at 8:30 pm | In Allstar Fitness bankruptcy, West Seattle businesses, West Seattle news | 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.”
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:
WSB has just confirmed that Allstar Fitness, put up for sale as part of its Chapter 11 bankruptcy (as first reported here February 5th), has a buyer – a company owned by former Seahawks player Sam Adams, who already owns other former Allstar locations.
Allstar’s staff received word of the sale this morning, and a handout about the announcement is available at the club’s front desk, Allstar’s Chapter 11 trustee Richard Hooper tells WSB. Hooper confirms that the prospective ownership company is West Seattle Athletic Club LLC, which state records verify is owned by Adams, who was a Seahawk for six seasons and was then part of the Super Bowl-winning Baltimore team in 2000. The former player owns five fitness clubs under the umbrella of Oregon Athletic Clubs, four including former Allstar locations in southwest Portland and in Tacoma. According to the Portland Oregonian, Adams bought the other three Oregon clubs last fall. (He also was reported in 2011 to have owned a downtown Seattle club that moved into a former Allstar space, though we haven’t been able to verify its current ownership.) Adams is a Kirkland resident, according to this recent story on the Seahawks website. Trustee Hooper tells WSB that nothing will change with West Seattle Allstar – “it’s status quo … a great place to work out” – until and unless the bankruptcy court approves the sale, although he doesn’t expect that to take more than a few weeks.
Three weeks ago, we reported on the court-appointed Chapter 11 bankruptcy trustee for West Seattle Fitness, the official name of the company operating West Seattle’s popular Allstar Fitness, and the likelihood he would be preparing the club for a potential sale. This week, trustee Richard A. Hooper is telling members that the club is indeed up for sale; he announced it via a letter available at the club’s counter. A member scanned the letter and sent it to us. At the heart of the letter (here’s the full scan):
… West Seattle Fitness has only one mission and that is to providea safe, clean, and enjoyable facility for use by its members and guests. Since the club opened, the staff has worked hard to make sure that this standard was met.
I have met with the management team of the club and we have discussed the mission as stated above and they have all assured me that they will continue to work to this end.
The facility is suffering from economic stress due to a number of factors that are complicated and will be difficult to sort out in the short term. As a result of this economic stress the only solution is to place the club for sale to another operator at the earliest possible date.
I am currently meeting with prospective buyers who would operate the club and who would bring funds necessary to repair and upgrade as needed for equipment and facilities. I think the process of locating a buyer, obtaining the necessary court approvals, and closing will take 60 days or perhaps slightly more, depending on hearings and legal issues. …
The letter says future updates will be available as “handouts” at the front counter. After we received the scanned copy of this one, WSB’s Katie Meyer spoke again with club manager Ramon Velasquez, who confirmed the letter’s distribution and the sale plans, saying there are at least three “very interested parties.” We first reported about Allstar’s bankruptcy filing back in October.
We’ve been asked multiple times in the past few days about the status of popular North Delridge health club Allstar Fitness, three months after our report about its Chapter 11 bankruptcy-reorganization filing. Here’s an update: Court documents from last Friday say a federal bankruptcy judge has appointed a Chapter 11 trustee for the club’s parent business West Seattle Fitness. WSB’s Katie Meyer contacted the club today for comment and spoke with general manager Ramon Velasquez, who confirmed that a trustee would be coming in to operate the club, assess its finances, and prepare it for a potential sale. (The role of a trustee is explained on this federal-government webpage.) Velasquez says the emphasis is on keeping the club open and protecting its members during this process, but any other specifics are pending the arrival of the trustee. We plan to check back next week. The club’s ownership voluntarily filed for Chapter 11 almost five months ago, and summarized the reason in one document from the case file as wanting to reorganize and stay in business while resolving a “dispute” with their landlord. Photo credit: King County Assessor website
Management at Allstar Fitness says it plans to send a letter to its members explaining that its recent Chapter 11 filing is not affecting and will not change membership services and operations. We sought out Allstar management/ownership after receiving inquiries from members who said the filing was the subject of rumors; we also have reviewed court documents. The filing in the Western Washington division of United States Bankruptcy Court, under the company’s official name West Seattle Fitness LLC, actually happened in late August, as Allstar general manager Ramon Velasquez pointed out in a conversation with WSB researcher/editorial assistant Katie Meyer. He says the club’s daily operations, including hours, classes, and staff, have not and will not be affected by the proceedings, and that the forthcoming letter to members will include that information. Velasquez told WSB that memberships will not be affected and that there has been no interruption in employee wages, health coverage, vacations, etc. He says the club’s operations are strong and that last month was their best September ever for memberships. (Chapter 11 is a bankruptcy filing for reorganization, as explained on this federal-government page.) Photo: King County Assessor website
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