YogaWorks, a provider of yoga instruction, filed for Chapter 11 bankruptcy protection and entered a purchase agreement with Serene Investment Management. Serene will serve as the stalking horse bidder, acquiring YogaWorks’ digital and education business and intellectual property.
YogaWorks is expected to conduct an auction pursuant to Section 363 of the U.S. Bankruptcy Code in which the Serene purchase agreement sets the floor for the auction, a process designed to achieve the best offer, subject to approval by the court.
Under the direction of its existing management team, YogaWorks’ operations will continue via its livestream and on-demand digital platforms, YogaWorks Live and MyYogaWorks, as well as its teacher training and workshop departments, with all of its in-person studio locations around the country closing due to the ongoing effects of the COVID-19 pandemic. The company does not expect there to be any significant changes to employees’ day-to-day job responsibilities, and expects that current employees will continue to be paid and receive benefits in the ordinary course of business.
“The COVID-19 pandemic has created unprecedented challenges for our industry and business, including mandatory studio closures and social distancing-imposed attendance restrictions even where studios have been permitted to reopen,” Brian Cooper, CEO of YogaWorks, said. “We have been taking action to adapt to these challenges, including expanding our digital platform that now offers YogaWorks students over 40 live streaming yoga classes per day and over 1,000 hours of pre-recorded classes and yoga workshops – all from the best teachers in the business. We have also successfully transformed our world renown teachers training and certification offering for our students and teachers to a virtual environment creating new and exciting revenue opportunities for the company. After considering a number of alternatives to overcome the financial challenge of the studio closures, we determined that implementing an orderly restructuring process is in the best interest of all of our key stakeholders, most notably our dedicated teachers and passionate students. With the improved financial flexibility provided through this process, we will continue to build upon the strengths of our digital and educational platforms, both of which have proven to be successful and have experienced significant growth over the course of the past several months. We look forward to continuing to serve our loyal students and positioning YogaWorks for long-term success.”
In connection with the Chapter 11 filing, Serene provided a commitment for debtor-in-possession financing, which will provide the liquidity to support YogaWorks through the pendency of the reorganization.
“I would like to extend my sincere appreciation to our employees and teachers for their tireless commitment to YogaWorks over the past several months, years, and in many cases decades. We are so impressed by the passion and love that our teams have displayed despite the many challenges faced. We have also been humbled by the support and dedication that we continually receive from our students as we’ve fought through these uncharted challenges together, displaying the amazing impact that YogaWorks has had in the communities we serve. We will continue to make decisions that provide the most benefit to our team, students, and partners, and we are confident that we will emerge from this process a stronger organization,” Cooper said.
Shulman Bastian Friedman & Bui is serving as legal counsel to YogaWorks and Force 10 Partners is acting as financial advisor to the company.