BowFlex: $37.5M 363 Sale to Johnson Health Tech and Liquidation Plan

BowFlex Inc. filed for chapter 11 protection on March 4, 2024, in the U.S. Bankruptcy Court for the District of New Jersey. The company obtained $25 million in postpetition financing from Crystal Financial LLC d/b/a SLR Credit Solutions, ran a court-supervised auction, and sold substantially all operating assets to Johnson Health Tech Retail for $37.5 million. The court confirmed a chapter 11 plan of liquidation on August 19, 2024; the plan distributed non-transferable liquidating trust interests to general unsecured creditors and canceled equity on the effective date.

Business Profile and Distress Drivers

Business model. BowFlex entered chapter 11 as a portfolio of recognizable home-fitness brands. The company described its business as marketing, developing, and manufacturing fitness products sold under the BowFlex, Schwinn, and JRNY brands, with manufacturing primarily outsourced to third-party manufacturers in Asia.

Johnson Health Tech Retail said its acquisition included the BowFlex, Schwinn, and JRNY brands and integrated them into its North American sporting goods and e-commerce group, with BowFlex joining a broader brand family that includes Matrix, Horizon, and Vision Fitness.

Johnson Health Tech is a multinational fitness equipment manufacturer headquartered in Taichung, Taiwan, with manufacturing in Shanghai and Taiwan and R&D centers in Shanghai, Taiwan, and North America. The company's retail division (Johnson Fitness & Wellness) operated more than 475 stores worldwide, and local reporting described Johnson Health Tech as having nearly 500 global retail locations.

Prepetition rebrand. Nautilus, Inc. became BowFlex Inc. effective November 1, 2023, including a NYSE ticker change from "NLS" to "BFX". In May 2023, the company sold the Nautilus brand for $10.5 million and described a post-divestiture focus on BowFlex, Schwinn, and JRNY.

Distress drivers. BowFlex told CNN the bankruptcy was driven by a "post-pandemic environment and persistent macroeconomic headwinds," describing production ramp-ups after 2020 holiday demand that later left the company with excess inventory when demand slackened and retailers canceled advance orders.

Axios reported that BowFlex derived more than 46% of revenue from cardio products and experienced a 28.5% drop in direct-to-consumer cardio sales over the last nine months of 2023, citing an industry observation that consumers were "more interested in weights now than cardio."

Prepetition strategic alternatives. Oregon Business reported that the company had been seeking "strategic partnerships and sources of capital infusion" since summer 2021, quoting CFO Aina Konold stating that "the marketplace is now saturated with product offerings." Athletech News reported in February 2024 that BowFlex warned its future was "in doubt" and had been exploring strategic alternatives in the month before the filing.

Workforce impacts. Oregon Public Broadcasting reported that the Vancouver, Washington-based company signaled it would lay off more than 200 employees. KGW reported that BowFlex announced layoffs of 202 workers in Clark County starting in April 2024.

Capital Structure, DIP Financing, and Sale Process

Capital structure at filing. The First Day Declaration described roughly $16 million of funded debt under a term loan facility secured by a first-priority lien on substantially all assets, alongside roughly $60 million of trade and other general unsecured obligations, primarily accounts payable.

Tom's Guide reported that BowFlex listed $140 million in assets and $126 million in liabilities in its bankruptcy filing and that more than $60 million of debts were owed to component suppliers and manufacturing partners. A company representative told Tom's Guide that BowFlex's product lineup remained intact and that the JRNY connected fitness app was not being discontinued.

DIP financing. The company said the DIP totaled $25 million and included a $9 million revolving commitment plus a $16 million term loan roll-up, with financing provided by Crystal Financial LLC d/b/a SLR Credit Solutions. The unsecured creditors' committee objected to the DIP structure, including the roll-up, lien scope, release/challenge protections, and investigation mechanics.

DIP terms. The DIP Motion described a facility with pricing tied to term SOFR plus a margin, a default-rate step-up, and an unused-line fee. The motion also described budget-based controls: a weekly compliance certificate cadence and variance tests comparing receipts and operating disbursements to an approved budget, using 90% (receipts) and 110% (disbursements) thresholds.

Carve-outs and investigation budget. The Final DIP Order described a pre-trigger professional fee carve-out tied to the DIP budget (up to $550,000 per week with an aggregate cap of $2.75 million), a post-trigger professional fee carve-out capped at $250,000, and a committee investigation budget up to $50,000 (for investigation but not prosecution). The order also capped chapter 7 trustee fees at $10,000 if a chapter 7 trustee were appointed.

Sale process. BowFlex's sale was structured around a stalking horse asset purchase agreement with Johnson Health Tech Retail at a stated price of $37.5 million cash at closing. The Bidding Procedures Order set a bid deadline of April 5, 2024, an auction date of April 8 if needed, an objection deadline of April 11, and a sale hearing on April 15, with closing required by April 22 absent lender consent to extend. The order also approved stalking horse bid protections that included a break-up fee equal to 3.5% of the $37.5 million price, an expense reimbursement cap of $600,000, and escrow mechanics for bidder deposits.

Stalking horse protections. The stalking horse protections included a 3.5% break-up fee and a $600,000 expense reimbursement cap, alongside a 10% good-faith deposit framework.

Assumption and assignment. The bidding procedures order established a notice framework for contract counterparties and cure amounts and required objections to be filed by the sale objection deadline (or a later supplemental deadline). If a cure dispute was not resolved before the sale hearing, the order contemplated segregating disputed cure amounts pending resolution and proceeding with assumption and assignment mechanics.

Sale order. The Sale Order approved the transaction as a section 363 sale free and clear of liens, claims, and interests (except assumed liabilities), and included good-faith findings under section 363(m). The order also included successor-liability disclaimers: the purchaser was not treated as a successor by merger or de facto merger theories and was not liable for claims other than those expressly assumed.

Post-sale operations. Johnson Health Tech's post-closing statements described the BowFlex acquisition as expanding its market presence and positioning BowFlex and Schwinn alongside other brands in its portfolio.

Plan Confirmation and Liquidating Trust Administration

Plan confirmation. The court entered a Confirmation Order on August 19, 2024, confirming a chapter 11 plan of liquidation, and the plan's effective date occurred on August 23, 2024. The plan implemented a liquidating trust structure designed to hold remaining assets, pursue retained causes of action, administer claims objections, and distribute recoveries to trust beneficiaries.

Liquidating trust structure. Under the Second Modified Plan, holders of allowed general unsecured claims became liquidating trust beneficiaries and received non-transferable liquidating trust interests entitling them to a pro rata share of the liquidating trust recovery pool. The plan identified UMB Bank, N.A. as the liquidating trustee (or a successor trustee appointed under the governing trust agreement). Remaining assets — including cash, equity interests in certain subsidiaries, retained causes of action (subject to release limitations), tax refunds, deposits, letters of credit, holdbacks, and other property not sold in the transaction — vested in the liquidating trust on the effective date, while amounts reserved for administrative and priority claims were excluded.

Class treatment. The confirmed plan categorized claims and interests into classes: secured and priority claims addressed through cash payment or agreed treatment, general unsecured claims receiving the residual trust interest, and intercompany/subordinated claims and equity interests canceled.

Releases and opt-outs. The Confirmation Order reflects that the plan included release, exculpation, and injunction provisions and offered opt-out mechanics for third-party releases through solicitation packages and opt-out forms. The confirmation order described the liquidating trust as the estate representative for retained causes of action, with authority limits set by the plan and liquidating trust agreement.

Post-effective deadlines. The effective date occurred on August 23, 2024. The Effective Date Notice set a September 23, 2024 deadline for certain post–April 23 through effective date administrative claims (other than professional fees) and for rejection damages claims, and set an October 7, 2024 deadline for professional fee applications.

Claims agent. The court authorized Epiq Corporate Restructuring, LLC to serve as the administrative advisor with claims management and noticing functions. The services schedule described Epiq maintaining official claims registers, providing an online proof-of-claim filing tool, processing claims submissions, and preparing and serving required case notices.

Frequently Asked Questions

When did BowFlex file for chapter 11 bankruptcy?

BowFlex filed chapter 11 petitions on March 4, 2024 in the U.S. Bankruptcy Court for the District of New Jersey.

Where was the BowFlex bankruptcy case filed and who was the judge?

The case was filed in the U.S. Bankruptcy Court for the District of New Jersey. The lead case proceeded as Case No. 24-12364 before Hon. Andrew B. Altenburg Jr.

Why did BowFlex file chapter 11?

BowFlex attributed the filing to a post-pandemic demand reset and macro headwinds, describing a production ramp-up followed by excess inventory and retailer order cancellations as demand slackened. Other coverage highlighted a shift in consumer demand within fitness categories, including declining cardio demand.

What was BowFlex’s sale process and who bought the company’s assets?

BowFlex pursued a section 363 sale process in chapter 11 and entered into a stalking horse agreement with Johnson Health Tech Retail. Johnson Health Tech said it acquired the BowFlex, Schwinn, and JRNY brands and closed the transaction on April 22, 2024. BowFlex's chapter 11 announcement described the purchase price as $37.5 million cash at closing.

What was BowFlex’s DIP financing in chapter 11?

BowFlex obtained a $25 million DIP facility that combined up to $9 million of new-money revolving availability with a $16 million roll-up into a DIP term loan, provided by Crystal Financial LLC d/b/a SLR Credit Solutions.

How did BowFlex’s chapter 11 end?

After the 363 sale closed, the case transitioned to a chapter 11 plan of liquidation implemented through a liquidating trust. Court filings reflect that the plan was confirmed on August 19, 2024 and became effective on August 23, 2024.

What happened to BowFlex shareholders in bankruptcy?

Court filings reflect that equity interests were canceled on the plan’s effective date as part of the liquidation plan, while general unsecured creditors received liquidating trust interests representing a pro rata share of the trust’s recovery pool.

Who is the claims agent for BowFlex?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

For more chapter 11 case research, visit the ElevenFlo blog.