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The administrator of Derrimut 24:7 Gym is assessing offers for the debt-riddled chain, while staff are expected to receive their full superannuation entitlements in any sale.
Administrators are still working through the financial position of Derrimut’s flagship businesses, which collapsed this month due to spiralling debts owed to the Australian Tax Office, staff, businesses and landlords.
Nick Solomos’ Derrimut Gym.Credit: Eddie Jim
During the first creditors’ meeting on Monday, more creditors came forward and a committee of creditors was formed. Administrator HM Advisory told creditors it had assumed responsibility for an additional six Derrimut businesses.
A source aware of the administration process but unable to speak publicly said the administrator would only consider offers that paid the superannuation entitlements of staff.
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The Derrimut 24:7 Gym chain was founded in Melbourne’s outer west in 2010 and has long been popular among bodybuilders. With 25 sites in Victoria and South Australia, the gyms quickly became known for their large format and affordable memberships, which cost as little as $5 a week.
Only a year ago, founder Nick Solomos said he had plans to open 300 gyms by 2030 and bragged that the business had “shitloads” of members.
The three main companies that constitute the Derrimut 24:7 Gym chain were placed in administration by Solomos on November 5 amid mounting debts from the ATO and creditors.
The next day, lenders to Derrimut, BizCap, appointed receivers over the company’s entire assets and property.
Derrimut’s gyms have continued to trade since its collapse, though at least two are expected to close after lenders took possession of two properties and are now selling them as “vacant on possession”.
An investigation by this masthead in September revealed the parlous state of Derrimut’s business, which was struggling to pay for day-to-day business expenses, including toilet paper. At the same time, the business was also paying for staff members’ luxury cars, and large allowances to Solomos and his family. It is estimated the companies owe more than $30 million, of which an estimated $15.4 million is owed in tax debts, unpaid superannuation and penalties.
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Rumours have been swirling of expected interest in the gym chain in recent weeks.
Billionaire businessman Adrian Portelli had initially offered to be a white knight for the business, which still has a large membership and strong brand despite its financial troubles, before pulling out and citing concerns about how the company was being managed.
After the company’s administration, he said he had made an offer for the business.
“They don’t run a business like I do, and I’m not willing to sacrifice tens of millions of dollars for someone else to potentially ruin my reputation in business,” he said. “However, now that it’s gone into administration, I wouldn’t be opposed to buying the whole f---ing lot.”
Portelli said he expected competition from larger gym groups looking to take over Derrimut 24:7 Gym’s membership, but not the brand.
A second creditors’ meeting is scheduled for next week.
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