Luxury boxing studio in San Diego, The BXNG Club, files for Chapter 11 bankruptcy

Logo of the luxury boxing studio The BXNG Club at its location in Kearny Mesa. (FOX 5/KUSI)

SAN DIEGO (FOX 5/KUSI) — The BXNG Club, a long-established boutique boxing gym with four locations in San Diego, has filed for bankruptcy as it struggles with significant debt despite rapid expansion in recent years.

The gym’s owners filed for Chapter 11 bankruptcy, also known as financial reorganization, late last month, citing a $600,000 discrepancy between assets and debts. According to court documents, the gym currently has $5.1 million in assets and $5.7 million in debt.

In a bankruptcy for financial reorganization, a company can typically retain its property and continue operations by following a court-approved plan to pay off its debts to creditors.

However, the bankruptcy raises questions about how the luxury gym can stay afloat ahead of the planned opening of a fifth location in Los Angeles, while one of its existing locations in North County is facing eviction.

Jason Turner, attorney for the BXNG Club, told FOX 5/KUSI in a phone call that the goal of Chapter 11 is to “reorganize, restructure and emerge stronger from bankruptcy,” preserve the company’s assets while “continuing to support its members.”

BXNG Club, which describes itself as the “fastest-growing martial arts and fitness brand” in Southern California, has opened most of its locations in the past five years. Its fourth and most recent location, a 17,000-square-foot gym in Rancho Bernardo, opened in March 2023.

About a year later, the BXNG Club began raising additional investor funds to support its “strategic expansion” goals, including its new 15,000-square-foot facility in Los Angeles’ Arts District, which is scheduled to open sometime in 2024.

But by mid-April, the BXNG Club at its Rancho Bernardo location appeared to be falling behind financially, with $95,403.99 in unpaid rent piling up by June 26, when the building’s owner issued a notice of default or termination of the lease, according to a wrongful possession lawsuit.

Financial details from the original bankruptcy filing reveal that the lease for the Rancho Bernardo site is one of the BXNG Club’s most expensive to date, including a $50,000 security deposit and rent of approximately $38,373 per month in the second year of the lease.

It’s unclear how much the expansion into Rancho Bernardo and Los Angeles drove BXNG Club crazy. According to bankruptcy documents, the gym was also the subject of two lawsuits that resulted in settlements totaling $329,000, which may also have played a role.

Independent litigator and bankruptcy expert Kent Sharp said that as a company expands rapidly, it is “not uncommon” for it to take on more debt than its revenues can cover, especially when additional liabilities in the form of litigation are added.

“(Companies) think they have a golden opportunity, but then they may overextend themselves,” he said, adding that the BXNG Club’s asset-to-debt ratio appears to put it in a good enough position to survive a successful Chapter 11 restructuring.

When asked by FOX 5/KUSI, Turner declined to comment on what factors contributed to the company’s financial difficulties.

How the restructuring process will affect investors that BXNG Club still hopes to attract on its website and existing members remains to be seen. Turner said the company “does not foresee any impact at this point” and is “working as hard as we can” to ensure the bankruptcy process moves in that direction.

However, given the typical timeline for Chapter 11 bankruptcies, it probably won’t be until next spring for the company’s creditors and the courts to agree to a restructuring plan that could still include store closures if necessary, Sharp said.

According to court documents, a first conference call between the BXNG Club’s creditors and lawyers is scheduled for later this month, July 23.