True Fitness closure: Why most members will get $0 back

Natasha Ann Zachariah (0:07)

True Fitness and True Yoga customers and its employees were left in the lurch last week after these fitness businesses suddenly closed. Many have unused membership packages and services, and members have reported losses of more than $609,000.

Now this is another case of a business shutting its doors overnight. And it's not just gyms. From nail salons to spas, interior design firms to bridal studios, many customers have lost money because they paid upfront, only for the business to fold. Why do consumers still choose, continue to choose large prepayment plans despite knowing the risk? Also, is there enough consumer protection in place as these sudden business closures have become more common? Welcome to The Usual Place, the podcast where we have real conversations about the headlines. I'm Natasha, and to walk us through how the gym industry works and the risk of prepayment packages, I have two guests. My first guest is Debby Lim, a senior partner at Dentons Rodyk's Litigation and Dispute Resolution Group. Now, you're also the co-head of the firm's restructuring insolvency and bankruptcy practice.

And interestingly, you're also a member of True Fitness since June 2025 Or should I say now a former member of True Fitness.

My other guest today next to you on the couch is Jeremy Ko, an entrepreneur in the sports and fitness industry, who has over the years started many gyms with different concepts. So as of 2026, now you've opened 25 fitness gyms and three climbing gyms, and you've closed three. So you bring all this experience of what's happening in the gym and industry. And that's where I want to start first with, which is Jeremy, what is happening with the industry? Because, you know, it's not the first time a mega gym like True Fitness and True Yoga has closed. And I think many people will remember California Fitness shut in 2016 And over the past decades, we've also seen smaller gyms or niche studios, like Ritual, UFC Gym, Phoenix Fitness and Crew Cycle, all shut down, right? So what's happening with the fitness industry?

Jeremy Ko (2:07)

I would say that for the fitness industry, it has become a lot more specialized. So people used to go to a big box gym, which we all think of California Fitness, True Fitness, and of course the pioneers like Fitness First and Pure, who are still doing very well, not to say anything about them. But to say that people used to go to these places previously because that was the only option that they had. And in that case, then it became the Orchard Road of our earlier years. People would go there because that was the only place to do good shopping. But now people can go to their suburban malls. So it's the same thing. If you now, if they want to go climbing, they want to go pilates, they want to go yoga, they go to a specialized place, they don't actually have to go to True Fitness anymore. So because of that, True Fitness, on top of having their legacy, big floor plates, multi-concept options, they are fighting against people who are more efficient, able to give a much more specialized service. So on top of high rental, on top of competition for boutique gyms, on top of higher manpower costs, because all the gyms are fighting for the same manpower, I think all these are factors that contribute to its failure.

Natasha Ann Zachariah (3:09)

And now people also want to like exercise outdoors, they have TikTok videos that they can follow, they don't really need to go to the gym to kind of do that, to get fit right, or to stay active, right? It was very interesting, you know, Debby, as I mentioned, you know, about $600,000 have been lost from True Fitness.

Jeremy Ko (3:27)

Probably more.

Natasha Ann Zachariah (3:28)

Probably more, so the last figure that I have that is about $600k, you know. What are the chances of customers getting their money back?

Debby Lim (3:36)

I read somewhere that it may be as high as $18 million in prepayments. So, I think it's quite unlikely that they will recover anything. You just be an unsecured creditor, queuing up in the line behind all the preferred creditors, like the employees and techs. That's like the head of unsecured debts.

Natasha Ann Zachariah (3:56)

Yeah, so what does it mean? So you're saying that consumers and our customers are really like the last people who will be repaid?

Debby Lim (4:02)

Yes, that's right.

Natasha Ann Zachariah (4:03)

So really no chance of getting your money back?

Debby Lim (4:06)

Quite unlikely, yeah.

Jeremy Ko (4:08)

It's like, Hady is on the dollar, I guess. If I was saying, maybe you get back 10%, you'll be very, very lucky already.