Gym giant 24 Hour Fitness Worldwide has nearly four million members for its 440 clubs in 14 states, but the coronavirus has taken a heavy toll on the chain since it announced the closure of all of its clubs on March 16. Franchises recently reopened in Dallas and Houston, with more openings scheduled for the coming weeks. Yet the company faces severe headwinds.

On Friday, S&P Global Ratings downgraded the company’s debt rating from “CCC +” to “D”, citing the company’s non-payment of interest on June 1 on senior bonds due 2022. S&P had previously lowered the rating in March and November. . 24 Hour Fitness has entered a 30-day grace period, but S&P also doesn’t expect the company to make payment during that period.

“We believe that the closures of fitness clubs linked to Covid-19 have significantly altered the company’s liquidity position. In addition, there are credible news reports that the company is seeking a debt restructuring or Chapter 11 bankruptcy filing, ”according to the S&P research note released Friday.

A “D” is S&P Global’s lowest credit rating and is based on an obligation that is “in default or in breach of an imputed promise”. The definition further states: “The ‘D’ rating will also be used when filing a bankruptcy petition or taking similar action and where failure to perform an obligation is a virtual certainty, for example. due to automatic suspension provisions. A bond’s rating is downgraded to “D” if it is the subject of a troubled exchange offer. “

The fitness chain has $ 1.3 billion in debt from a 2014 debt buyout by AEA Investors and the Ontario Teachers’ Pension Plan. The company is actively seeking a buyer before court-supervised bankruptcy proceedings, according to Bloomberg. 24 Hour Fitness did not respond to Forbes‘request for comment.

The country’s gymnasiums are facing prosecution for continuing to bill members after the coronavirus shutdown. 24 Hour Fitness suspended subscription billing on April 16, after a backlash on social media and a lawsuit filed by a gym member. The company declined to comment on an ongoing litigation for a April Forbes story.

The biggest challenge is how long it will take people to return to gyms where sanitation and the spread of disease in a confined space are concerns, people sweat and breathe heavily.

The company announced Tuesday morning that he expects nearly 50% of his clubs to open in June and the rest of the portfolio to open in early August. He encouraged members to use his free 24GO app during the shutdown to access 1,500 workouts that can be done anywhere.

24 Hour Fitness reports that a comprehensive program has been put in place to ensure “a healthy and safe club environment”. It includes contactless check-in; some equipment removed; and signage in clubs reminding members of social distancing and safety protocols. Clubs will initially require reservations made one day in advance on its app for 60 minute sessions. Gyms will close for 30 minutes after each workout for cleaning.