True Fitness Closed Down - What can the Members Do?
We Ask A Lawyer about His Views!
By EasyLaw Editorial Board
Every Malaysian and his/her/it/whatever-gender-you-identify-as dog/cat/iguana/pet tiger have heard about the sudden closure of all True Fitness and True Spas centres in Malaysia.
But in case you have been living under a rock for the past few days, here is a brief recap.
In a shocking announcement on 9.6.2017 on their website, True Fitness announced that all True Fitness and True Spas centres in Malaysia will cease operation on 10.6.2017. In the same announcement, True Fitness also claimed to have purchased memberships for their members to redeem and personal training sessions to be utilised at CHi Fitness.
However, CHi Fitness has clarified on their website that “they have no contract or arrangement to honour or takeover any commitment from True Fitness”
So, What can the members do now?
The members of True Fitness have since organized themselves to consider their options. But what can they really do? In this inaugural blog post of EasyLaw, we ask Mr. Loke Yuen Hong, a litigation lawyer practising in Low & Partners, to give his two cents worth:
To put it simply, members of True Fitness, depending on the terms of the membership, may be entitled to bring court action against True Fitness, or lodge a complaint with the Tribunal for Consumer Claim. For the Tribunal, there is a limit of jurisdiction. They can only hear claims up to RM25,000.00. In the event your gym membership costs you more than RM25,000.00, you will have to go to the court.
And members can claim for ....
Partial or full refund of the membership fees, plus any other losses you suffered due to the breach.
Loke Yuen Hong
What about those who are still paying installments for their gym membership?
Loke explains that the members should, depending on the terms of the membership, contact their banks to stop making further payments to True Fitness.
The banks may take some time to investigate and obtain legal advice on whether they can do so. Each bank will have its own operating procedure.
However, if the members believe that their banks are not acting properly, EasyLaw suggests that they do make a complaint to Bank Negara.
Dollars & Cents of True Fitness
Now we have all heard bits and pieces about the finances of True Fitness.
To see the official picture, we have conducted a company search on one of the subsidiary, True Fitness Sdn Bhd, and found this:
It appears that True Fitness, in year 2014, has had an income of RM6.7 million. Impressive.
The profit meanwhile (i.e. income minus expenses) was at RM23,089.00 after tax. That is RM23,089.00 for the whole year.
The financial information for 2015 and 2016 are not found in this report.Looking at the balance sheet, at the end of 2014,
True Fitness has some RM4.9 million of assets. However, it also has some RM16.5 million of liabilities.
In other words, True Fitness owes people more money than they have in assets.
How does it impact any claims by the gym members?
We showed Loke these figures. Loke explained that based on these numbers on the balance sheet alone,
in the event True Fitness is wound up, the employees, members, and other creditors such as the landlords and suppliers, may not be paid in full.
However, owing to the passage of time, and depending on how the assets and liabilities are valued, the figures may not paint an accurate picture.
By now, the figures may have also fluctuated quite a bit.
Other unknowns including whether the parent company would step in to pay all the creditors, and if there is any white knight interested in this company.
Depending on circumstances, the creditors or members should also consider taking steps to ensure that the assets of the company are secured. This, they have to discuss with their lawyers.
But would't the directors and the owners of True Fitness be responsible for this fiasco?
Legally speaking, a company is a separate legal entity from its directors and shareholders. Imagine that the company is a real human being. The company, being his own person, is responsible for his own conducts and debt.
Just like your credit card company cannot force your mother to pay for your credit card debts, you cannot force the directors and the shareholders to pay for whatever debt or liability a company incurred, save for a few exceptions which are very limited in scope.
One such exceptions being fraud committed by the company at the behest of the directors/shareholders. For example, the directors/shareholders who control the company caused or used the company to cheat other people of their money.
In such circumstance, the directors/shareholders would be liable for the fraud. This exception takes into account the fact that a company cannot think or act on its own.
The directors (and in some circumstances, the shareholders) are the controlling minds behind the company. If they are the ones doing the hanky panky, albeit hiding behind the company, they would have to pay the price.
So, can the members go after the directors & shareholders of True Fitness?
After a hearty laugh, Loke said,
This is where I am going to use a phrase that lawyers often use, and most of the people don’t like to hear. It depends. Is there anything to show that the directors and shareholders fraudulently cheated the members of their monies? This is something that the members have to discuss with their lawyers.
In Summary, True Fitness member, what you should do NOW?
EasyLaw has done all the research for you. Follow these steps below:
Step 1 : Make a police report at the nearest police station to your gym.
The police station nearest to your gym has already gotten a template , all you need to do is to bring
Step 2 : Call your credit card center (If you’re still paying installments)
Step 3: Submit complaints and claims with the Consumer Claims Tribunal here.
Read more here
Step 4: Submit complaint to Bank Negara Malaysia (if you’re still paying installments)
Step 5 : Participate the upcoming True Fitness member's gathering :
Date: 17th June (Saturday) & 18thb ( Sunday)
Time: 3pm - 430pm
Venue: Jaya33 , level 4 parking space (Upon approval from management)
Bring along your documents
to show your support to help victims of true fitness.
If you’ve followed through the guidelines above, you are good to go.
“united we stand, divided we fall”
all interested members should group up and present a united front to take the necessary legal action against the company.
EasyLaw understands that Loke from Low & Partners is currently advising some aggrieved members of True Fitness.
We thank Loke for giving views on legal perspective about True Fitness case.