High Court orders liquidation of gym chain Physical amidst HK$74 Million salary debt

The High Court on Monday directed gym chain Physical to wind up operations due to over HK$74 million in unpaid salaries owed to 374 staff members. 

This wind-up order affects both the gym's parent company, Physical Beauty & Fitness Holdings Limited, and its subsidiary, Physical Health Centre Hong Kong Limited.

Judge Linda Chan Ching-fan ruled for the liquidation after the provisional liquidator informed the court that all 13 subsidiaries of Physical were insolvent. A written judgment is expected in two weeks.

This development follows a petition filed by seven former employees last year, seeking the liquidation of both companies after Physical announced the closure of all its branches in September. 

The court revealed that Physical owed unpaid salaries totaling HK$74 million, while all branches of its gym and beauty salons were in arrears on rent.

Notably, the Tsim Sha Tsui branch held customer prepaid service contracts amounting to HK$488 million, but the companies' total assets were only HK$2 million. 

Despite efforts to resell gym and beauty equipment, Physical has only managed to recover about HK$15 million, insufficient to meet its debts.

In a related matter, Link Property Management Services Limited has filed a separate winding-up petition against the Tsim Sha Tsui branch, with a hearing scheduled for February 19.

(Eunice Lam)