Popular gym in administration owing $1m
A POPULAR Loganholme gym with about 1300 members is in administration with mounting debts totalling more than $1 million.
Kathleen Vouris and David Ingram from Hall Chadwick were appointed administrators to Busterboo Pty Ltd on August 5.
The company operates the Fernwood Women's Health Club at Loganholme.
The gym remains open.
About 10 employees work at the club, five of those are full time.
Mr Ingram, in a report to creditors, has recommended the company be placed in liquidation.
In August 2018 the company owed $593,479 to the Australian Tax Office in unpaid taxation and superannuation dating back to June 2012.
The ATO applied to wind up Busterboo in September 2018.
The company took a $243,461 loan with Magnolia Capital in February this year to pay the tax office.
In March the loan increased to $509,118.
That month Busterboo paid $438,149 to the ATO to cover the outstanding liabilities.
Two months later the company failed to make a payment on the Magnolia Capital loan and was issued a default notice on May 14.
According to Mr Ingram's creditor's report, $752,736 is owed to Magnolia Capital.
Investigations reveal Busterboo also owes $258,207 to nine unsecured creditors, including $250,000 to the ATO in outstanding GST payments and penalties concerning its superannuation debt.
Employee entitlements total $29,824.
Busterboo held about $25,909 in a National Australia Bank account at the time of the administrators' appointment and, according to Mr Ingram's report, has limited assets.
Memberships, personal training and merchandise sales were the main sources of the company's $1.4 million in income last financial year.
Hall Chadwick has continued the process to sell the business, with expressions of interest received from seven parties and confidentiality agreements executed with three.
"The director has not provided any explanation for the financial difficulties experienced by the company to date," the creditor's report noted.
Mr Ingram believes undercapitalisation and inadequate cash flow were among the "key causes" of the company's financial difficulties.
The company's two shareholders could not be reached for comment.