Indoor cycling brand, Flywheel, has filed for Chapter 7 bankruptcy and closed all its US studios – just months after settling a legal case with rival Peloton.
In its bankruptcy filing, the company reported it has less than US$50,000 in assets and 5,000 creditors with liabilities of between US$50m and US$100m.
After launching in 2010 with studios in New York City, the company expanded nationwide, operating around 40 studios in cities including Atlanta, Boston, Chicago and Seattle.
Flywheel offered indoor cycling-based HIIT cycling classes, in which riders competed against each other.
The company received funding in 2014 from the Benvolio Group, an investment arm of Lew Frankfort, and launched an at-home bike in November 2017.
However, a lawsuit by rival Peloton brought in 2018, alleged that Flywheel had copied aspects of Peloton's technology to stream live and on-demand classes, as well as to track riders' performances and in February 2020, Jeffery Naumowitz, Flywheel's chief financial officer, admitted in a statement filed at the United States District Court in Texas that Peloton's complaint was "valid".
Flywheel shut down its Flywheel At Home service on 27 March this year (2020).
In addition to struggling with the Peloton lawsuit, Flywheel has also been hit by the challenging trading conditions which are being experienced by many operators in the US market, where the health and fitness industry is having the roughest ride globally, due to wider reputational issues associated with gyms, local lockdowns and lack of government support.
In January 2020, Town Sports International had announced plans to take over Flywheel and its studio business, but the deal subsequently fell through due to the pandemic.
Town Sports has itself been in Chapter 11 since September 14th and is seeking a buyer, with a consortioum, led by Tacit Capital
, reportedly working on a deal.
On going into Chapter 11, Town Sports reported liabilities of between US$500m and US$1bn, with similar levels of assets. Mosts of its liabilties being in the form of unpaid rent.