DO NOT SIGN MEMBERSHIP, SCAM AND FRAUDULANT PROMISES
Complaint
Barbara
Country: United States
I signed up for a 3 year membership in May08 and told the sales rep that my company was potentially going to change locations and asked him if I would be able to cancel the membership in such an event to which he said yes. Sure enough after only using the gym a handful of times my work situation changed and I have not been able to use the membership since June08. When I have called several times to cancel I was told this was not possible b/c another ballys was less than 20 miles way. I have repeatedly stated the dishonesty on behalf of their sales dept and would like to stop paying for a service that I do not use and that was misrepresented. I have tried numerous times to resolve this issue with Ballys with no resolution. Their position is that I must pay regardless b/c of the contract terms even though the contract was misrepresented to me and I was rushed to sign it.
Comments
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaYCJ1Pm5O.g&refer=home
"Bally Files Bankruptcy for Second Time in 14 Months (Update3)
By Bob Van Voris
Dec. 3 (Bloomberg) -- Bally Total Fitness Holding Corp., the operator of 349 gyms in the U.S., filed for bankruptcy little more than a year after emerging from court protection with financing from hedge fund firm Harbinger Capital Partners.
Bally and 42 affiliates sought Chapter 11 protection today in U.S. Bankruptcy Court in New York, reporting $1.4 billion in assets and $1.5 billion in debt. Bally, which claims 3.1 million members, exited bankruptcy in 2007 with $233.6 million from investors led by New York-based Harbinger.
It’s the second bankruptcy filing in three days involving a private equity firm-owned company. Hawaiian Telcom Communications Inc., a provider of local and long-distance telephone service, sought court protection Dec. 1 in Wilmington, Delaware. Carlyle Group, a Washington-based private-equity firm, owns Hawaiian Telcom through a subsidiary.
Bally, citing a drop in new member sign-ups and increased expenses, said it plans to reduce debt through court-supervised reorganization or a sale. The gym operator said it’s involved in “advanced negotiations” with some lenders over a possible sale, which would need court approval.
“Bally’s long-term indebtedness, coupled with the lack of refinancing options in today’s constrained credit markets, have limited our ability to restructure using out-of-court vehicles,” Michael Sheehan, Bally’s chief executive officer, said in a statement.
Existing Cash
Bally, which reported more than 100,000 creditors, said it owes $247 million in unsecured debt to U.S. Bancorp and $231 million to HSBC Holdings Plc.
Bally’s debt includes $291 million owed to first-lien lenders on a term loan, revolving credit and letters of credit. Second- lien debt is $247 million, and $221 is owed on subordinated notes.
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They just went through bankruptcy about a year ago:
http://www.reuters.com/article/businessNews/idUSN0139351820070801
http://en.wikipedia.org/wiki/Bally_Total_Fitness
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Controversy
Bally Total Fitness has been the subject of controversy over their sales and membership cancellation practices, with some customers claiming they were misled into signing long membership contracts, and subsequently found themselves dealing with collection agencies [2]. The fitness chain has had problems for years. In April 1994, Bally paid $120,000 to settle Federal Trade Commission charges of illegal billing, cancellation, refund, and debt-collection practices. But consumers complain that little has changed over the years.[3] From 1999 to 2004, over six hundred customers complained to the New York Attorney General's office, leading to an investigation and subsequent agreement by Bally Total Fitness to reform their sales tactics in February, 2004.[4]
According to ConsumerAffairs.com, "We get so many complaints about Bally Total Fitness, it's a workout just to sort through them."[5]
Paul Toback, a former White House aide in the Clinton administration who joined Bally as a corporate development officer in 1997, was named Chief Executive Officer (CEO) in late 2002, after predecessor Lee Hillman resigned.[6]
Investigations
Bally has been the subject of at least one federal investigation, in addition to the aforementioned probe into consumer complaints against Bally, conducted by the New York State Attorney General, regarding the firm's sales practices. In April 2004, Bally disclosed the U.S. Securities and Exchange Commission (SEC) was investigating its accounting practices. The company eventually restated its financial statements for 1997 through 2003.
The SEC has yet to complete its investigation, but an internal Bally probe blamed the company's "culture of aggressive accounting" on Mr. Hillman and former Chief Financial Officer John Dwyer; both men have repeatedly denied any wrongdoing.[6]
On February 28, 2008, the SEC formally filed financial fraud charges against Bally Total Fitness. Among the charges, the SEC alleges that in 2001, Bally overstated its originally reported stockholder's equity by roughly $1.8 billion (over 340%), and understated its 2003 net loss by $90.8 million, (or 845%) [7].
Bankruptcy
Bally filed for bankruptcy in August 2007, with outstanding debts of $761 million.[8] Over the preceding ten years, its stock price had fallen from a high of approximately US$37.00 to less than $0.37 on the Pink Sheets, a plunge of over 99pc of its value.[8]
On October 1, 2007, Bally announced its emergence from bankruptcy court protection, 100% owned by a hedge fund, Harbinger Capital.
On December 3, 2008, Bally again filed for bankruptcy due to problems arising from a global credit crisis. The company indicated that it would explore options including reorganization or possibly even a sale, but that it hoped to emerge from bankruptcy as soon as possible.[9][10]
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