GNC was struggling for years before the pandemic, largely due to heavy debt and the declining popularity of malls. The company carries $905 million in debt and was facing a $160 million payment in August.
Without bankruptcy financing, GNC said it would run out of cash by the end of June, according to court documents. GNC has lost more than $500 million over the past 4 years.
Like many other high-profile companies going bankrupt in recent months, GNC also rewarded top executives with millions of dollars in controversial “retention bonuses” before filing for bankruptcy.
GNC paid about $4 million in cash retention bonuses to C-level executives, with a $2.2 million bonus to CEO Kenneth Martindale on top of his $7.1 million salary in 2019. He joined the company in 2017.
GNC said it intends to emerge from Chapter 11 bankruptcy in the fall and continue retail operations on a smaller scale, closing up to 1,374 stores out of around 7,000 stores in the U.S. by the end of the year.
That means thousands of American workers might soon be unemployed in one of the worst job markets in history.
GNC has 6 months to decide whether it will reorganize or sell itself for $760 million — possibly to its largest shareholder, Harbin Pharmaceutical Group, one of China’s largest drug-makers.