West Seattle, Washington
(Photo courtesy office of state AG Ferguson, who is at the podium)
11:04 AM: Just announced by state Attorney General Bob Ferguson – a criminal wage-theft/tax-evasion case with defendants including Sam Adams, who owned the former West Seattle (Athletic) Club until filing for bankruptcy and relinquishing it to the building owner last October. What follows is the official news release; we’re on a media conference call and will add any additional information that it yields (update: that’s added at end of story):
Attorney General Ferguson files criminal wage theft and fraud charges against athletic club executives Sam Adams and Dana Sargent
$500,000 in unpaid taxes, withheld salary, and unpaid insurance premiums
Washington State Attorney General Bob Ferguson has filed criminal charges in King County Superior Court against the owners and operators of West Seattle Athletic Club for stealing wages and evading taxes. In only the second wage-theft criminal prosecution brought by the state, the Attorney General’s Office seeks justice for harmed workers and Washington taxpayers.
Defendants Sam Adams and Dana Sargent are alleged to have engaged in theft and fraud totaling over $500,000. The defendants allegedly failed to pay state taxes, withheld wages from workers, failed to pay workers’ insurance premiums, and failed to pay unemployment insurance.
1:21 PM: First, to be clear if you haven’t been following this closely, former NFL player Sam Adams is no longer the owner of the gym at 2629 SW Andover – as part of his bankruptcy proceedings, he gave up the lease three weeks ago, after announcing the then-West Seattle Club would be closed for two days; it reopened a week and a half later under a “new” owner – the landlord – and a new name, West Seattle Health Club. Here are two updates, one relating to the ex-ownership, one relating to the new:
ADAMS BANKRUPTCY NOW CHAPTER 7: Originally, Adams and his wife filed for Chapter 11 bankruptcy reorganization in late June, days before an eviction hearing related to the fitness center, which he had purchased for $75,000 as part of its previous owner’s business-bankruptcy case in early 2013. As reported here October 28th, the federal trustee proposed either dismissing the case or converting it to Chapter 7 for reasons including the Adamses’ failure to file mandatory financial reports since the filing. They have since filed reports, but at a hearing this past Friday, according to bankruptcy-court documents, they also voluntarily agreed to have the case converted to Chapter 7. (As explained here, the difference between 7 and 11 can be described as “liquidation” vs. “rehabilitation.”)
NEW CLUB UPDATE: The long comment thread following our previous report, from the West Seattle Health Club’s opening date on November 4th, continues to include questions from customers past and present. A club employee e-mailed to say he has started an unofficial Facebook page in the club’s name, where he’s posting information, since the club’s “placeholder” website has yet to be updated. Find it here.
COVERAGE ARCHIVE … all our coverage of what’s transpired relating to the 2629 SW Andover club, under four names over the past 2 years, is archived here, newest to oldest.
ADDED 7:51 PM: While writing this, we e-mailed WSHC VP Dan Lehr with a few questions, to which he has replied. Most importantly, he says, he expects to update its website this week, now that they have “firm ship dates” for equipment that’s on order, as well as firming up other operational details. Our other question was about the pool; Lehr says, “The cold weather has slowed our painting in the pool area. I won’t be able to give a firm date on the pool completion until I receive our quotes to fix the pool equipment. Hopefully I’ll have that by Wednesday. … Unfortunately the HVAC over the pool was in such a state of disrepair we had to order an entirely new system. I’ll have an ETA on that later this week as well and will update the site.”
After a 12-day closure, the fitness-center building at 2629 SW Andover did indeed open this morning as the West Seattle Health Club (thanks to the commenters who provided first word). If you’ve missed our ongoing coverage, this is the building previously long known as Allstar Fitness, then for about a year and a half as the West Seattle (Athletic) Club.
The owner of the latter, Sam Adams, facing an October 24th court-ordered deadline to pay $1.1 million (mostly back rent), closed it as of October 23rd (though signage only mentioned a two-day closure); documents in his personal Chapter 11 bankruptcy case indicate that he technically “rejected” continuing the lease as of October 27th. On Saturday, October 25th, it was announced that property owner John Pietromonaco had taken it over and would reopen it as a new club with a new name. The new club’s operations VP Dan Lehr told WSB last night that there would be a “skeleton class schedule” for starters, that child care would be available, and that the pool will remain closed for repair/renovations “for about two weeks.” For more backstory, our ongoing coverage is archived here, newest to oldest (we have just merged the archives of coverage so it traces all the way back to our first report on the Allstar bankruptcy two years ago).
ADDED 4 PM: The opening exercise schedule. (Please refer to the club’s website for further updates.)
Tuesday (November 4th) is now set as the date the former West Seattle (Athletic) Club will reopen as West Seattle Health Club, according to Dan Lehr, who is managing WSHC for property owner John Pietromonaco. He also tells WSB that a “simple placeholder website” is up at westseattlehc.com. Another thing Lehr mentioned that isn’t on that website yet: “I should also have all payroll records as well as membership information sometime Tuesday so we can get a hold of everyone. … Prices will be the same as before and we will extend membership expiration dates for people that have paid-in-full memberships and not bill monthly members for the days we were closed.” If you want to contact them for more information, the “placeholder website” includes an e-mail-contact form.
This is the tenth day the club at 2629 SW Andover has been closed; its former ownership announced the club would close Thursday, October 23, and Friday, October 24, reopening Saturday, October 25th, but instead of reopening, the former ownership turned it over to the property owner to whom they would have had to have paid $1.1 million in back rent and other charges in order to keep it. A message in the name of former owner Sam Adams was sent to a membership mailing list last Wednesday; it included an apology and a denial of the landlord’s allegations of “sabotage” in the moving-out process.
By Tracy Record
West Seattle Blog editor
We talked this afternoon with Dan Lehr, who is managing the transition for property owner John Pietromonaco, who is now the club owner too.
“Possibly as early as Sunday, maybe sooner,” Lehr told WSB in a phone conversation.
For the first time since the fitness center at 2629 SW Andover closed last Thursday – billed as a two-day closure but then extended by an ownership change – members on a mailing list from the former ownership received a message this afternoon. This is the entire unedited text of the e-mail:
It is with great sorrow that I write to you that the West Seattle Club has closed. The landlord will be taking over shortly and the club will be back open as soon as possible. I am sorry that I was unable to turn the club around from its first bankruptcy and I take full responsibility for its failure. The strain on the relationship with the landlord became too much as he refused to fix anything structural or mechanical in the club. I invested money into systems and structures that are typically not the tenants responsibility. The landlord refused to fix the following:
The HVAC system. This caused the system to always broken. It was either too hot or too cold.
The swimming pool filtration system was always broken.
The electrical wiring was in adequate in the building which caused fires and the voltage spikes. These spikes would cause the pool and hot tub control equipment to always blow up, fail, or catch on fire. Thus the hot tub and pool are always out of order. These spikes also blew up a lot of the cardio equipment. That is why a lot of pieces were always down.
The pool is not VGB certified and was supposed to be certified back in 2011. By draining the pool the landlord can get this fixed so the pool is to code.
The sprinkler system in the locker rooms are too short so we could not put a ceiling up in the locker rooms.
The air exchange system in the locker rooms is broken so the ceiling do not always dry and they collect water which leads to the mold.
The air exchange system in the pool does not work properly and should be replaced. That is why the walls are dripping with rust.
Landlord needs to tear out the shower walls so mold and water will not continue to go into the shower walls.
Landlord needs to replace all of the leaky windows.
I have also taken out most of my equipment and will hopefully be able to finish removing the remaining pieces in order to make room for your new owner to purchase newer equipment for the club. The club was not attacked or sabotaged. The swimming pool was drained so it can be repaired, the drains brought to code, and painted. There was no vandalism and there was a lot of good equipment left. I left the carpet shampoo machine, tile cleaning machine for the bathrooms, and many other cleaning supplies. All paper towel dispensers were left on the walls. The club needs cleaning from the move, upgrades in equipment, supplies purchased. All of which is a small investment by your new owner John Pietromonaco. If you have any question you can contact him by clicking on his name or you can call his office at (206) 232-7502 .
All of your membership and credit card information has been removed from the premises and will be destroyed. If you would like to sign back up at the club you will have to email John or stop by the club. Your memberships are officially terminated and you will not be charged again by the West Seattle Club. Some of you have not been charged for the last two months as we have been in transition with our new management software CSI. You will not be charged for those two months. For those of you that have been charged before the club was closed down or you joined less than 30 days ago, you will be receiving a full refund. If you have any questions please feel free to email us from the website at www.westseattleclub.com. We will be using the contact information that we have on file to send you your refund.
There are also many mistakes that I made that I will learn from. West Seattle is a great community and deserves a great club for people to reach their fitness goals. For falling short I apologize. Good luck and God Bless.
The denial of sabotage is an apparent response to what the property owner’s representative, Dan Lehr, said in a message we published as part of our Saturday night coverage.
Meantime, a new document in Adams’s bankruptcy-case file confirms what had been mentioned in other documents the past few days – what technically happened is that he sought extra time to decide on whether to extend or “reject” the club lease, a decision required as part of the proceedings, and last Friday, the judge turned down the request, so the lease was “rejected” as of this past Monday. The newest information from the new ownership/management of the 2629 SW Andover facility is in this story we published Tuesday afternoon; we’ll update this with anything else that comes in this afternoon/evening.
4:21 PM: While the message suggests e-mailing “from the website,” we haven’t found an e-mail address on it so far. A couple layers in, we did find this form; let us know if you use it and get a reply.
By Tracy Record
West Seattle Blog editor
The former, owned by Sam Adams since early last year, announced a two-day closure last week but did not reopen on Saturday as promised; later Saturday, a representative of property owner John Pietromonaco announced that they’ve taken over and will open the facility as a new club.
First, the newest update, received this morning from that representative, Dan Lehr, who is managing the transition to WS Health Club and says it is “moving faster than expected.” He describes the points below (unedited, as we received them) as “updates from my staff”:
(SUNDAY NIGHT UPDATE FROM NEW MANAGER IN COMMENTS)
7:52 PM: The fitness club at 2629 SW Andover – closed since Thursday – has a new name: West Seattle Health Club.
And we’ve just found out a lot more from the man who says property owner John Pietromonaco has hired him to run it, Dan Lehr.
He expects it to remain closed at least until the end of the week.
(added) First, from an e-mail Lehr sent just before our conversation, this is what he says has happened, and what he says is being planned:
As you are well aware Sam vacated the premises Friday night and left the club in a state of disarray. Even stooping so low as to sabotage many of the clubs systems and equipment – most seriously of which is the pool, threw employee shirts and toilet paper into the pool filters and drained the pool of water.
He removed most of the cardio equipment and anything that was left was either in a state of disrepair or already out of order. Most of the free weights have been removed as well as most anything else that wasn’t nailed down, including computers, phones, sound systems and all membership records. Fortunately most of the selectorized weight machines (have weight stacks & pins) were left behind and are in good working order. In short most anything that could be easily removed was taken.
HRP Properties has a vested interest in the property which was designed solely to be an Athletic Club. We fully intend to continue to operate the property as a full service athletic facility and are committed to restoring the club to its former “fully operational state”.
Some of the items that will be addressed immediately will include the following:
Club HVAC systems will be repaired – this is to begin Monday of this coming week.
The entire club will be deep cleaned from top to bottom – locker rooms, carpets, shower areas – everything.
Cardio equipment will be either repaired or replaced with new
Free Weights will be replaced with new
Stereos and TV’S – replaced with new
Numerous other miscellaneous fitness and operations items replaced with new
Grounds will be cleaned
Pool areas will be renovated as needed
Our phone conversation went a lot further, including where West Seattle (Athletic) Club memberships stand, and more, including Lehr’s background. Adding that shortly.
ADDED 9:31 PM: Lehr says he’s “been in the health and fitness industry for 25 years as a club owner,” including “Redmond Athletic Club, which I designed and built from the ground up.” Again, he says property owner Pietromonaco is now the owner – and that, he says, is rare, for a club operator to own the land and building – and he has been hired to manage and basically rebuild it. He says he generally operates with a “relaxed culture” and wants to “build up morale, get a new culture in there, that starts to emanate to the members – the past two operators have left the members high and dry.”
About the members: Where do they stand?
Lehr says they are “trying to get the membership information, it’s hosted on a cloud site, we’re working to obtain all that. If we can get that, we can start crediting people, extending (their) information because of downtime, but without that, we can’t take care of those folks. But what we will do is start up another club they can come and join for no startup fees. We’re going to try to come up with a dues structure. We’re still gathering information on what (the previous operation) had been selling. We’re going to come up with one that is competitive and still viable to make the club profitable.”
Lehr says he is not entirely sure what the status was as Adams left – was he formally evicted? did he officially hand over the business? Just one thing: “(Adams’ club) is no longer operational. State law requires him to find a comparable facility (to keep members) within 10 miles and he has not done that, so he cannot bill members again.” He says Adams is using “nearby” storage for what he removed from the club.
“We’re going to do the right thing. I’m not sure what that is yet. My past experience, I’ve taken over clubs before. We want everyone to stay. We want the chance to show them (what we can do). … If I can get membership and dues information, then I’m in a seamless situation. If I don’t have that, I can’t.”
He said they hope “to be operational sometime near the end of next week.” (The pool could take up to 4 weeks, since he says they will take the opportunity for some HVAC improvements, repainting, etc., in that part of the club.) “But we have to have a lot in place – a point of sale system, new member contracts,” and they will be meeting with staff. He says they want to be completely “transparent” as they move through the process of opening the “new” club and promises daily updates.
SUNDAY NIGHT: Since it’s been a busy day with windstorm aftermath, Harvest Festival, etc., we don’t have a new standalone story, but did note that the new manager has posted this in comments tonight.
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.
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 email@example.com. 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:
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.
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