Barbara Ellen Enterprises, which runs physical fitness centers for thousands of Washington-area women, closed its 10 branches yesterday and immediately sought court permission to reorganize under federal bankruptcy laws.
"The doors have been closed," said Stanley J. Samorajczyk, a bankruptcy lawyer for the company. Negotiations are under way to try to reopen the centers or turn them over to new management, he added. The company's aim, he said, is to assure women who currently hold contracts for exercise programs that they "will be treated fairly."
Barbara Ellen's petitions for reorganization under Chapter XI of the bankruptcy law were filed late yesterday afternoon in U.S. Bankruptcy Court in Alexandria. Although the firm did not disclose its financial status, Samorajczyk said the company had been hurt by the Washington area's economic downturn and said he thinks it is likely it is losing money.
David Carpenter, the firm's president, could not be reached for comment. The company, believed to be about 10 years old, has exercise and fitness centers in Northern Virginia, suburban Maryland and the District of Columbia. As many as 10,000 women hold contracts for its programs, Samorajczyk said.
One industry source estimated that five or six workers are employed by each center, putting 50 to 60 jobs in doubt.
Anne Mills, a vice president of Spa Lady Inc., a women's fitness firm with centers in the Washington area and across the United States, said yesterday that Barbara Ellen executives proposed a deal several months ago. "Barbara Ellen had approached us about us buying them out at that time," she said.
Spa Lady rejected the proposal, mainly because Barbara Ellen's centers are too close to Spa Lady's, she said. "We would have overlapped too much."
Barbara Ellen's president Carpenter indicated he was considering retiring, she said, and "didn't mention to us that he was in financial trouble.
"We were quite surprised today when we heard [about the bankruptcy proceeding]," Mills said. Spa Lady now plans, she said, to reconsider taking over several Barbara Ellen centers and may hire some of the firm's employes.
Local consumer agencies reported receiving telephone calls yesterday from women who found the doors at Barbara Ellen centers locked. Officials urged women with contracts for Barbara Ellen programs to get in touch with consumer affairs offices in the counties or cities where they live.
Samorajczyk said the firm would notify contract holders through newspaper advertisements or other communications about future plans for the centers.
"There's nothing they can do at this point," he said. "What we would ask them to do is sit tight and do nothing . . . We're negotiating with a number of parties."
Most health spa members purchase long-term memberships which range in price from about $150 a year to several times that amount, depending on the services offered. Under federal bankruptcy laws, paid-in-advance members are treated as creditors and must share the firm's assets with other creditors, some of whom may be legally entitled to be paid first.