BowFlex Inc. announced on Tuesday that it has filed for Chapter 11 bankruptcy in a New Jersey court. This decision comes after the home exercise equipment company entered into a “stalking horse” asset purchase agreement with specialty retailer Johnson Health Tech Retail Inc.

Asset Purchase Agreement

Johnson Health is set to pay a total of $37.5 million in cash to acquire substantially all of BowFlex’s assets, pending approval from the bankruptcy court. An auction will also be held to allow for higher bids to be considered.

Financial Support

In addition to the asset purchase agreement, BowFlex has reached an agreement with Crystal Financial LLC and its units to amend an existing term loan credit agreement. This amendment includes offering a debtor-in-possession loan of up to $25 million to support working capital and general corporate purposes during the bankruptcy process.

Uncertainty for Common Stock Holders

Despite these developments, the company stated in its regulatory filing that holders of the company’s common stock may not receive any payment or distribution following the Chapter 11 filing. The stock was halted after closing at 20 cents on Monday.

Overall, BowFlex is taking proactive steps to address its financial challenges and ensure continued operations during this restructuring period.

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