Hong Kong gym chain Physical Fitness has been ordered to wind up after a local court ruled that the company was unable to repay its debt, including more than HK$600 million owed by one branch.
People walk by Hong Kong gym chain Physical’s Wan Chai branch on September 9, 2024, days after the fitness company announced closure. Photo: Hans Tse/HKFP.
High Court judge Linda Chan on Monday ordered the gym chain’s parent company, Physical Beauty & Fitness Holdings Limited, and its subsidiary, Physical Health Centre Hong Kong Limited, to liquidate, local media reported.
The fitness chain, which had operated in Hong Kong for 38 years, announced a “temporary closure” last September, citing high rents. The announcement came after the city’s pensions regulator warned of legal action against the fitness company over HK$3 million outstanding contributions for 740 employees to the MPF pension scheme.
According to media reports, a provisional liquidator told the court on Monday that all 13 subsidiaries under Physical were insolvent. Some branches failed to pay their rents, while others had a large amount of contract liabilities.
The debt of the Tsim Sha Tsui branch amounted to HK$634 million, the court heard.
The company had sold its fitness and beauty equipment, as well as current assets of around HK$200 million, but it was not enough to cover its debt, the liquidator said.
Hong Kong’s High Court on November 11, 2024. Photo: Kyle Lam/HKFP.
A representative of the creditors said Physical owed more than HK$74 million to ex-employees, with 374 former staff members backing the liquidation petitions.
Chan eventually ordered the gym chain to head into liquidation. A written judgement will be handed down in two weeks, she said.
Established in 1986, Physical had 23 branches across the city, serving over 500,000 customers, the chain had written on its website, which was no longer accessible as of Monday.
Hong Kong authorities had received more than 1,400 complaints related to Physical following its shutdown last year, involving more than HK$72 million in prepaid fees.
