Luxury Spa Chain Files for Bankruptcy
Spa Chakra, the luxury spa company that provides comprehensive health and wellness care in such posh locations as the Ritz-Carlton in Marina del Rey and the Grand Hotel Park in Gstaad, Switzerland, has filed for Chapter 11 Bankruptcy protection. The company filed the voluntary petition for bankruptcy protection with the Bankruptcy Court, Southern District of New York on December 10. The downturn in the economy is credited with being a major factor to the company's difficulties.
Hercules Technology Growth Capital Inc., a California-based Nasdaq-traded specialty finance company that provides venture debt and equity, plans to take over the company within the next two weeks. According to court documents, Spa Chakra has assets of a little more than $28 million and debt totaling $23 million.
"Spa Chakra and Hercules have had an incredibly effective working relationship since 2008 and both parties agree that this current transaction is a fantastic opportunity for the successful operations of the business," says Mike Canizales, founder and chief executive officer of Spa Chakra.
The mechanics of the transaction will have no impact on the day-to-day operations of Spa Chakra, according to Canizales. "With the immediate financial backing of Hercules, Spa Chakra will continue to provide the highest quality spa services for our clients at our prominent spa locations worldwide," adds Canizales.
Initially founded in 1998 in Australia by Canizales, a former executive with MicroSoft and Harris Mylonas, a veteran of five-star hospitality companies, the company operates spas under the brand names of Spa Chakra in addition to Guerlain Spa. The Spa Chakra at the Palmer House Hilton in Chicago is an 8,000 square foot spa facility featuring 12 treatment rooms. The Spa Chakra at the Hilton in San Francisco offers 13,000 square feet of luxury space featuring 10 treatment rooms, and a state-of-the-art health club. The company also has a line of leading high-end luxury cosmetic brands.
This year Spa Chakra has received numerous awards from industry associations, including the 2009 Award for Best Spa Brand from SpaFinder as well as the award for Best Urban Spa.
"We are confident that the company will continue to execute its growth strategy and anticipate that Spa Chakra, shortly after emerging from its reorganization, will swiftly return to profitability," says Manuel A. Henriquez, co-founder, chairman and chief executive officer of Hercules.
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