Bally Total Fitness

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Bally Total Fitness is an American health club chain with 400 gyms in 70 cities, and claims 4 million customers ^[1]. The chain offers franchising opportunities, and has recently opened gyms in South Korea, China & the Bahamas. The company's headquarters are located in Chicago, Illinois.

[edit] Controversy

Bally Total Fitness has been the subject of controversy over their sales and membership cancellation practices, with some customers claiming they were misled into signing long membership contracts, and subsequently found themselves dealing with collection agencies ^[2]. From 1999 to 2004 over 600 customers complained to the New York Attorney General's office, leading to investigation and an agreement by Bally Total Fitness to reform their sales tactics in February, 2004.^[3]

Paul Toback, a former White House aide in the Clinton administration who joined Bally as a corporate development officer in 1997, was named CEO in late 2002, after predecessor Lee Hillman resigned.^[4] In April 2004, Bally disclosed that the U.S. Securities and Exchange Commission was investigating its accounting practices. The company eventually restated its financial statements for 1997 through 2003.

The SEC has yet to complete its investigation, but an internal Bally probe blamed the company's "culture of aggressive accounting" on Mr. Hillman and former Chief Financial Officer John Dwyer; both men have repeatedly denied any wrongdoing. ^[4]

The company filed for bankruptcy in August 2007 with outstanding debts of $761 million^[5]. Over the preceding 10 years, its stock price had fallen from a high of approximately $37.00 to less than $0.37 on the Pink Sheets ^[6].

On October 1, 2007, Bally announced its emergence from bankruptcy court protection, 100% owned by a hedge fund, Harbinger Capital.