YogaWorks, one of the leading providers of authentic yoga instruction in the United States, announced that it has voluntarily filed petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Court”). As part of this process, YogaWorks has entered into a purchase agreement (“Agreement”) with Serene Investment Management (“Serene”), pursuant to which Serene will serve as the stalking-horse bidder and has agreed to acquire the YogaWorks digital and education business and intellectual property. YogaWorks expects 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 live stream 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,” said Brian Cooper, Chief Executive Officer of YogaWorks. “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 has also provided a commitment for debtor-in-possession (“DIP”) financing, which will provide the liquidity to support YogaWorks through the pendency of the reorganization. YogaWorks’ digital business has been profitable since it was established, with strong fundamental growth, and a unique and compelling foundation for the growth of the company, brand, and many of the world’s top yoga instructors.
Mr. Cooper added, “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.”
Shulman Bastian Friedman & Bui LLP is serving as legal counsel to YogaWorks and Force 10 Partners is acting as financial advisor to the Company.