NEW YORK (Reuters) – The former owner of New York Sports Clubs and Lucille Roberts will forfeit a $250,000 bond to settle New York Attorney General Letitia James’ lawsuit over its billing practices during the coronavirus pandemic.
James had sued Town Sports International Holdings Inc in September, saying it kept charging membership dues, failed to issue promised credits, and refused to honor cancellation requests after the pandemic forced it to close its New York gyms last March.
The settlement papers were filed in a New York state court in Manhattan on Wednesday. Town Sports did not admit liability.
James had sued Town Sports in September, two weeks after the company filed for Chapter 11 bankruptcy protection.
A group of lenders led by private equity firm Tacit Capital later took control of many Town Sports assets in exchange for $80 million in debt. Town Sports is now winding down.
James plans to provide restitution to gym members with the $250,000 bond, which Town Sports posted in 2015 under a state law to protect those members during a bankruptcy.
She said Town Sports had agreed last April to halt its improper billing practices, but resumed them in September after gyms in New York were allowed to reopen, even charging members of gyms whose doors remained closed.
The new owners of New York Sports Clubs and Lucille Roberts are not part of Wednesday’s settlement.
Town Sports operated 99 New York Sports Clubs and 16 Lucille Roberts before the pandemic struck. It also operated gyms in Boston, Philadelphia and Washington, D.C.
(Reporting by Jonathan Stempel in New York; Editing by David Gregorio)