Derrimut 24:7 Gym flagship company in administration, Melrose Park branch poised to close after court decision
As the embattled fitness chain plunges into administration, a landlord has had a big court win over an Adelaide branch and unpaid rent.
Derrimut 24:7 Gym’s flagship company has entered administration as a court ruled a landlord could evict the chain from its Melrose Park premises in Adelaide’s south.
Insolvency expert Stephen Dixon of HM Advisory was appointed administrator of the business on Wednesday, documents lodged with ASIC reveal.
On Friday last week, billionaire Adrian Portelli abandoned his intention to save the struggling business, in a move that was widely expected to cripple its ability to stop an ATO application to wind up the company over a $12.53m tax debt.
The popular gym chain will operate as normal for now after founder Nikolaos Solomos handed control over to Mr Dixon, who is starting his investigations into the company’s financial position.
On Thursday, Adelaide’s District Court dismissed the chain’s bid to prevent landlord Dimitri Aretzis from closing its Melrose Park premises over unpaid rent.
The Advertiser understands the appointment of an administrator prevents Mr Aretzis from evicting the chain immediately, but an eviction in the near future is possible.
Judge Michael Burnett told the court the company entering into administration did not form part of his judgment, but the news served to “fortify (the judgment) rather than take away from it”.
Mr Aretzis told The Advertiser he was “glad it’s over”.
“I think the judge made the right decision,” he said.
Last week, hours after the chain was granted another extension by Victoria’s Federal Court to repay its debts, Mr Portelli told his Instagram followers he would no longer save the business.
“Sorry guys,” he wrote on Instagram. “I truly wanted to be help save Derrimut gym and be part of keeping such an iconic name alive for its loyal members.
“Unfortunately, we couldn’t see eye-to-eye and make the deal work and I’ve had to pull out.
“I still have massive respect for what the Derrimut team has built and wish them nothing but success in the future.”
Mr Portelli in September announced he planned to “step in” to help fix Derrimut 24:7’s troubles, but details of the arrangement were scarce.
Derrimut 24:7’s branches in Angle Vale, Munno Para and Noarlunga closed this year over claims of unpaid rent. A branch in Shepparton, Victoria, also closed.
Court documents obtained by The Advertiser said the company’s $12.53m debt as of June had been reduced from an initial $15m owed to the ATO in April.
Other creditors supporting the ATO’s wind-up application included Return to Work SA, Melbourne United Basketball, Del-Re National Food Group, Origin Energy and Equity Trustees Limited.
Mr Solomos told social media followers, gym instructors and The Advertiser earlier this year the chain was “not going anywhere” as he sought to save the company.
“For me, it was about opening gyms … and I didn’t pay enough attention to the little things and I didn’t have the right people in place,” he told a group of instructors in September.
He has been contacted for comment.
