Blink Fitness has secured bankruptcy court approval of its proposed Chapter 11 sale process and unveiled a USD 105m offer from UK-based gym operator PureGym Ltd as the stalking horse bid that will set a baseline price at a potential auction in October.

Judge J Kate Stickles of the US Bankruptcy Court for the District of Delaware signed an order on Tuesday (10 September) approving Blink’s proposed bidding procedures to govern a sale of its assets, establishing a 21 October deadline for bids, 28 October auction date, and 6 November sale hearing.

Additionally on Tuesday, Blink filed a notice in its Chapter 11 case that identified PureGym as a stalking horse bidder for the sale process. PureGym’s offer consists of a USD 105m base cash purchase price plus the assumption of certain liabilities, such as customer creditors and paid time off obligations for employees that transfer to jobs with the new owner.

As protections for serving the stalking horse role, Blink has proposed a break-up fee of USD 3.25m that PureGym would be entitled to if another buyer emerges as the winner of Blink’s sale process, as well as up to USD 2m of expense reimbursement.

Separate from the stalking horse bid, Judge Stickles signed an order today (11 September) authorizing Blink to implement a key employee incentive program (KEIP) that calls for bonus payments to four executives based, in part, on the results of the gym chain’s sale process. The aggregate payouts under the KEIP range from USD 600,000 to USD 1.5m.

Blink filed for Chapter 11 protection on 12 August with about USD 265m in funded debt, looking to sell its assets. The company said its business took a hit amid COVID-19 pandemic-driven shutdowns, which it weathered in part through debt financing that left it overleveraged.