FitLab - Chapter 11 Case Summary

FitLab filed for Chapter 11 following delayed and costly acquisition financing, heavy investment in a since-terminated Nike studio partnership, and supply-chain and inventory-financing disruptions at its Assault Fitness equipment business, compounded by merchant cash advance enforcement and a shipping halt, pursuing a Hilco-led sale process backed by a proposed $5.6 million DIP from lenders including an insider.

Business Description

FitLab Inc. ("FitLab"), together with its 30 affiliated debtors (collectively, the "Debtors" or the "Company")⁽¹⁾, is a fitness and sport-lifestyle business. FitLab was built as an integrated platform of brands serving similar consumers across fitness equipment, apparel and accessories, boutique studios, participation events, and digital fitness. The plan was to share technology, marketing, finance, and other infrastructure across the portfolio and cut duplicated resources. Studios and events were meant to introduce customers to the broader product portfolio.

The Company's liquidity constraints and recent dispositions have materially reduced the scope of that portfolio. Prior to the Petition Date, Assault Fitness, a fitness equipment business, generated the vast majority of the business's revenue and all of its profitability, and management intended to make it the focus of the restructuring. The Debtors' other businesses include the RPM Training product line, the Mile High Run Club and Y7 Studio boutique studio brands, and the Ragnar relay-event business.

⁽¹⁾ The Debtors filed Chapter 11 petitions in the District of Delaware on October 26, October 27, and November 2, 2026 (collectively, the "Petition Date").

Corporate History

FitLab's initial entities were formed in the second half of 2016, and its first investment closing occurred on June 1, 2017. The original vehicle was a small venture fund and studio with approximately $5 million in capital. Its early investments included XPT (Extreme Performance Training), Freeletics, Momentous, and RPM Training. Management concluded that minority ownership limited its ability to integrate businesses whose boards and objectives were not aligned, and by late 2018 the Company began moving to an operating-company model. The operating entity was formed in late December 2018 as MVMNT Inc., and the operating strategy began functionally in early 2019. MVMNT Inc. changed its name to FitLab Inc. in March 2021.

Pandemic-Era Pivot and Acquisitions

Studios were initially expected to lead the platform's rollout, and FitLab entered a partnership contemplating hundreds of franchise locations. The COVID-19 pandemic interrupted those plans before any of the locations were built, prompting a shift toward digital fitness and products.

FitLab acquired Electric Visual Evolution LLC ("Electric") in early 2020 to serve as the platform's apparel and accessories component. Wholesale represented approximately 80 percent of Electric's business and was severely disrupted by the pandemic. FitLab shifted resources to e-commerce, more than doubling that segment during the year, and then worked to rebuild wholesale. According to the Debtors' first day declaration (the "Declaration"), the changes needed to develop Electric into the intended strategic asset took too long.

A joint venture associated with Conor McGregor closed in early January 2021, and the McGregor FAST app launched that month. FitLab then acquired Fitplan, a deal that closed on approximately April 30, 2021. Completing the McGregor FAST transaction and related offering took long enough that the business missed much of the pandemic-driven increase in digital-fitness demand. As demand for fitness apps weakened after the pandemic, Fitplan required substantial reworking of its platform and economics, including its content-partner payment arrangements. The Fitplan acquisition also brought nearly $8 million in seller-note principal, plus accrued interest.

In October 2021, FitLab acquired Ragnar for approximately $9 million in common stock. Ragnar had generated more than $20 million in annual revenue before the pandemic, but revenue had fallen to approximately $2 million by the time the deal closed. Suspended events, spent registration proceeds, and accumulated liabilities created a substantial rehabilitation task. FitLab reduced events with inadequate economics and put more emphasis on trail races, which generally offered a better financial return relative to their costs. Cash burn declined more slowly than needed, and inherited past-due liabilities were more significant than diligence had indicated.

Assault Fitness Acquisition and Nike Partnership

FitLab entered a letter of intent for Assault Fitness in late March 2022 and completed the acquisition on February 9, 2024. The transaction was ultimately valued at approximately $55 million. That consisted of $35 million in cash, before offsets for assumed indebtedness, tax reserves, and negotiated holdbacks, plus $20 million in FitLab common stock. An earnout contemplated earlier in the process was reduced and restructured as performance changed, and no earnout was ultimately earned or paid.

FitLab had previously raised approximately $15 million of preferred equity through Series Seed and Series A rounds across 2019, 2020, and 2021. While the Assault Fitness acquisition was pending, Nike, Inc. ("Nike") led FitLab's $25 million Series B round with a $20 million investment. The two companies also entered a partnership to develop a pilot of 10 Nike studios in Southern California and the Austin, Texas area (the "Nike Studios"), and FitLab committed substantial resources to those locations.

Y7 Studio and Other Acquisitions

At the end of 2025, FitLab acquired Y7 Studio, a yoga studio business, for approximately $14 million in FitLab common stock, excluding the management incentive pool. FitLab's other acquisitions included Mile High Run Club, Sanctuary Fitness (also known as Novo Fitness), RPM, and Yoga Vida. Sanctuary/Novo Fitness and Yoga Vida were later closed.

Operations Overview

At its peak, FitLab's combined studio portfolio reached approximately 20 locations, and the business employed more than 400 people, mainly studio staff, trainers, and other studio and event personnel. After reductions in force, closures, dispositions, and licensing efforts, the Debtors employed approximately 80 people as of the Petition Date.

Fitness Equipment and Products

Assault Fitness is a functional-conditioning equipment business whose products include the AssaultBike, AssaultRower, and AssaultRunner. Before the filing, its international distributor business continued to generate receipts, while liquidity and logistics issues severely constrained domestic shipments. RPM Training is a smaller business focused primarily on jump ropes. The Company's shortage of working capital limited its ability to fund inventory for RPM Training and its other businesses.

Boutique Studios

Mile High Run Club offers treadmill-based interval and strength-training classes. Y7 Studio, a yoga studio business, added eight studios in Los Angeles, New York, and Austin to the portfolio.

Participation Events

Ragnar operates road and trail relay events. By late summer 2026, liquidity constraints led management to cancel certain events, creating participant refund obligations. A partner had funded the vast majority of recent race expenses.

Digital Platform

FitLab developed an app platform that could be adapted for multiple brands and used it for XPT, McGregor FAST, and Spartan Race. The digital initiatives did not achieve the anticipated sustained performance.

Prepetition Obligations

The Debtors' prepetition obligations include a senior secured facility arranged for the Assault Fitness acquisition, several smaller secured loans and credit lines, equipment financing, merchant cash advances, seller and convertible notes, and trade, lease, and other liabilities.

Senior Facility

FitLab arranged a senior secured financing through Atlas Credit Partners (the "Senior Facility") in connection with the Assault Fitness acquisition. An initial term sheet signed in July 2023 contemplated approximately $85 million, which underwriting reduced to $65 million. The facility is based on intellectual property and supported by creditor insurance. It funded in two closings, the first on February 9, 2024 and the second and final on July 10, 2025. Management estimates that the full $65 million facility produced just over $40 million in net proceeds after financing costs and related deductions.

FitLab also settled with Compass Point, the broker on the financing. Under the settlement, FitLab remained responsible for nearly the full transaction fee, even though the financing originally contemplated was unsecured and the financing ultimately obtained was secured debt.

Other Secured Debt

Other Obligations

Cofounder Claims and Guaranties

The Debtors' cofounders are collectively owed more than $2 million in unpaid management fees, plus additional unreimbursed expenses. According to the Declaration, these amounts have been left unpaid to keep cash available to the businesses. The cofounders are also estimated to have invested more than $1 million together in the recent period. They provided guaranties tied to the MCA Loans, the FL Victory equipment financing, and COVID-related payroll tax liens.

Events Leading to Bankruptcy

The Declaration attributes the Company's distress to four combined causes: delayed and costly acquisition financing; operating losses and integration costs across the portfolio; heavy investment in the Nike Studios followed by the end of that partnership; and severe supply-chain and inventory-financing disruptions at Assault Fitness. It also characterizes the business as insufficiently capitalized for its strategy and its overhead reductions as not implemented quickly enough. As liquidity deteriorated, the Company could no longer fund inventory and ordinary operations, and creditor collection activity further restricted its access to cash and shipments.

Senior Facility Funding

Although the Senior Facility was sized at $65 million, the Debtors could draw only $35 million in gross proceeds at the initial February 9, 2024 closing. Events and circumstances connected with the Senior Facility had already extended the process to seven months, and believing the Assault Fitness acquisition would otherwise be lost, FitLab went ahead with the initial funding. After premiums, costs, paydowns, and other reserves, that funding yielded just over $20 million in net proceeds against a closing cash requirement of just over $21 million. FitLab negotiated the deferral of part of its professional-services expenses to complete the transaction, but was left with a larger footprint and no additional working or growth capital.

The second and final closing came approximately 17 months after the initial funding. Once additional insurance capacity became available, FitLab had to procure a replacement lender. By the time the additional proceeds arrived, accumulated obligations and prepaid-inventory requirements consumed much of the liquidity. The Declaration attributes to the Company's debt structure a material impediment to obtaining a separate asset-based inventory facility. As a result, the Company carried significant debt without the working capital needed to realize the intended benefits of the acquisition.

Nike Studios Partnership

FitLab spent substantially all of Nike's $20 million Series B investment developing, launching, and operating the 10-studio pilot. Permitting and construction took longer than anticipated. The Company reported strong revenue at the locations, but inconsistent operating profitability impeded stable growth. The Declaration attributes the high cost of maintaining the intended service and brand standards both to those standards and to FitLab's own staffing and service decisions. FitLab made staffing cuts toward the end of 2025.

According to the Declaration, Nike, which had led FitLab's Series B round, terminated the partnership in early 2026. As part of the partnership agreement, the Company agreed to take on responsibility for the underlying leases. FitLab was left with 10 locations that could no longer operate as Nike Studios after more than two years of investment. The resulting closures shrank the studio division in 2026 and left ongoing landlord issues while the Company was already struggling to fund its other operations.

Assault Fitness Supply Chain and Supplier Credit

During 2025, Assault Fitness faced substantial uncertainty over import costs and customs releases following material tariff changes beginning in April 2025. Around the same time, issues with Impulse Fitness ("Impulse"), a major manufacturer, forced FitLab to move production to a replacement supplier that management identified as Arcana. The transition took approximately six to eight months. It left Assault Fitness effectively out of the market for an extended period, including much of the 2025 holiday selling season, historically its most profitable period.

The Impulse issue also cost FitLab its trade credit insurance. According to the Declaration, Sinosure China Export & Credit Insurance Corporation effectively excluded FitLab from coverage because of the Impulse issue, which eliminated the favorable payment terms manufacturers had offered. Before losing coverage, the Company estimates it benefited from more than $5 million, and possibly approximately $7 million, in supplier credit on terms of 60 days or more. Afterward, FitLab had to finance production in advance and pay in full before goods were released. Without an asset-based facility, it had to fund manufacturing, transportation, and the wait for customer payment from already-constrained resources. The unpaid balance owed to Impulse had been reduced from approximately $4 million to approximately $1.6 million. That obligation is separate from balances with current manufacturers, which according to the Company had been brought current.

Net revenue in the product business fell by more than 50 percent in 2025, and management estimates nearly $50 million in missed wholesale and direct-to-consumer orders. The Declaration describes these disruptions as the largest negative effect on 2025 performance. Because Assault Fitness profits had helped support the service businesses, the decline also reduced the resources available to the rest of the portfolio.

Operating Costs and Merchant Cash Advances

FitLab's expanded portfolio carried substantial payroll, lease, and shared-overhead requirements. The Declaration characterizes overhead as excessive from 2022 into mid-2025, while substantial capital was also going into the Nike Studios. It also states that the Company kept more employees than it could sustain and did not make necessary integration and staffing changes aggressively enough. From 2024 through 2026, FitLab carried out multiple reductions in force and exited acquired office leases, separate from its continuing studio lease obligations. The Company estimates that staffing and other overhead reductions removed more than $10 million from the cost structure, but those later savings did not remedy the working-capital shortage or restore sufficient funding for inventory, studio marketing, and the member experience.

The Company also raised financing under a convertible note in the second half of 2024, completed an initial closing in May 2025, and raised more capital under that note later in 2025. These measures did not produce enough working capital to stabilize the business.

With conventional financing unavailable, FitLab turned to the MCA Loans, which were short-term, high-rate advances. According to the Declaration, they were presented to management as variable receivables financing. Given the liquidity crunch, these advances became the only financing available to ship product, meet payroll, and keep operating. The Declaration describes collection pressure from the MCA Funders starting shortly after the Debtors agreed to the advances, with some funders asserting holds or liens. According to the Declaration, after communications with the MCA Funders and payment processors, and the MCA Funders' issuance of payment-redirect notices to the Debtors' payment processors, the Company's funds were withheld, further reducing its operating cash.

As of the Petition Date, FitLab held more than $3 million of fully paid inventory (at retail value) in U.S. warehouses. An arrangement with the third-party logistics provider had allowed some shipping despite payment issues, but inventory levels, shipment volume, and pace were not enough to sustain operations. The Company also estimates approximately $3 million in liabilities for unfulfilled Assault Fitness consumer presales, which the Declaration describes as having damaged customer confidence.

Financing Efforts and Divestitures

As pressures mounted and no significant new financing materialized, FitLab pursued asset-based financing with banks and specialty lenders. It received several term sheets and took certain discussions through successive credit committee reviews, but none produced a funded facility. The Declaration attributes this to the existing debt structure and deteriorating results. By summer 2026, the Company concluded that it could no longer rely on substantial new institutional equity or asset-based financing.

The Company then tried to simplify the business around Assault Fitness by selling certain assets of Electric and Ragnar and, after the Nike partnership ended, licensing the studio businesses to other operators. Restrictions under the Senior Facility prevented efficient releases of assets or intellectual property, which limited the available transaction structures and counterparties. Complex lender and insurer approval requirements also slowed the effort.

The sale of certain Electric assets brought in cash consideration that the Declaration describes as meaningful, plus the assumption of liabilities tied to a segment that had been wound down and had generated no revenue for several months. The Company also agreed to sell Ragnar, but that transaction had not closed as of the Petition Date. Neither transaction moved costs, employees, and other obligations off the books quickly enough to resolve the liquidity crisis. Discussions about reduced cash interest, access to reserves or cash collateral, and a modest expansion of the Senior Facility also failed to produce a workable out-of-court solution.

Creditor Enforcement and Shipping Halt

The Declaration identifies three pressures that worsened the immediate crisis by limiting the Company's ability to turn inventory into cash:

With shipments halted and no additional capital available, management concluded that an out-of-court restructuring was no longer practical. In management's view, a proactive court process offered a better chance to preserve creditor value than the risk of a forced liquidation.

Chapter 11 Filing

The Debtors entered Chapter 11 with little cash on hand and are seeking new-money DIP financing, partly from an insider, to fund operations while they run a sale process. Nicholas Rubin, a partner at Force Ten Partners, LLC, has served as the Debtors' Chief Restructuring Officer ("CRO") since October 22, 2026. The firm was first engaged on October 13, 2026 to provide financial advisory services and help with creditor negotiations.

DIP Facility

The Debtors seek approval of a new-money, superpriority senior secured, priming, delayed-draw term loan facility (the "DIP Facility"). It would be provided by two lenders (collectively, the "DIP Lenders"): Grizzly Investment Group, LLC, an entity formed by Rod Trujillo, who sits on certain of the Debtors' boards and is an insider of the Debtors; and Golazo NV, a Belgian company.

The Declaration characterizes the DIP Facility as the product of good-faith, arm's-length negotiations among the Debtors, the DIP Lenders, and their respective counsel and advisors, with the CRO, counsel, and advisors negotiating for the Debtors. According to the Declaration, the DIP Facility was the only financing available as creditor pressure mounted, and the Debtors intend to keep looking for a higher or better replacement facility.

Sale Process

The Debtors plan to run a comprehensive marketing and sale process led by Hilco Corporate Services, LLC, with the goal of generating enough proceeds to fund meaningful creditor recoveries. If asset-sale proceeds and litigation recoveries produce meaningful value, the Debtors intend to propose and confirm a Chapter 11 plan that provides recoveries for creditors.

First Day Motions

The Debtors request authority, but not direction, to incur debt and pay or satisfy obligations under the following first day motions: