Hong Kong gym chain Physical Beauty & Fitness Holdings Ltd. has been issued a liquidation order after a judge determined the company is insolvent. During a court hearing on Monday, Judge Linda Chan stated that the company’s assets, primarily gym and beauty equipment, are valued at just over HK$15 million ($1.9 million) after adjustments, which is insufficient to satisfy the claims of petitioning creditors.
The gym industry in Hong Kong is currently under strain due to high rental costs, competition from smaller gyms, and a sluggish economy. In September, Physical announced its decision to close after more than 30 years of operation, as reported by local media. The judge approved two winding-up petitions: one against Physical Beauty & Fitness Holdings and another against its subsidiary, Physical Health Centre Hong Kong Ltd. Both petitions were addressed in the same court session.
Judge Chan noted that the order would enable liquidators to take necessary actions to safeguard the assets of the holding company and its subsidiaries. According to the petitioners’ legal representative, Physical Health Centre Hong Kong has outstanding debts exceeding HK$74 million to over 370 creditors, primarily employees. Additionally, a branch of Physical located in the bustling Tsim Sha Tsui area has reported net liabilities exceeding HK$634 million, based on evidence provided by the provisional liquidator. Another subsidiary of Physical Fitness is scheduled for a wind-up hearing on February 19, as indicated on the Hong Kong judiciary’s website.
In a related context, Pure Fitness, a gym favored by bankers and executives in the city, faced legal action in August for alleged unpaid rent and management fees at several of its locations. The following month, the gym announced that it had resolved the dispute with its landlord.
