Winslow gym gets new lease on life

The Bainbridge gym is reopening this morning on a short-term basis. But the new operators hope to be around for a long time.

“This is a dream we’ve had,” said Mike Rosenthal. “We had been studying the possibility of opening a parallel gym on the island for the last six months when rumors started circulating about the old gym failing, but that would take a lot longer than getting in here.”

Rosenthal and his wife Alexa reopened the facility this morning under the name of Island Health and Fitness. Long-time island trainer Ubbe Liljeblad will manage the facility.

The Rosenthals are acting under a 90-day management contract with court receiver Michael Grassmueck. At some time thereafter, Grassmueck will sell the business at public auction, Rosenthal said.

Because of the short duration of their contract, long-term memberships will not be available. Anyone interested in using the facilities may pay $6 for daily use or $50 for a monthly membership.

Memberships purchased from the former operators cannot be honored at this point, Rosenthal said, because any remaining money has become the property of the receivership estate, and is not available to pay any costs of the new operation such as rental of the building or the equipment.

The interim operation will be streamlined, resembling the operation as it existed in February, when Grassmueck closed the doors.

“We have repaired a lot of the equipment at our own expense,” Rosenthal said. “Our primary mission is to serve the members of the gym community in February, with equal or better services than were available at that time.”

On Feb. 14, federal judge Marsha Pechman appointed Grassmueck as receiver for former facility operator HMC/HPC and founder Kevin Lawrence. The federal Securities and Exchange Commission accused Lawrence, his associates and certain affiliated companies with selling some $91 million in unregistered stock in HMC, Znetix and two limited partnerships known as Cascade Pointe.

According to the SEC complaint, the Madison Avenue fitness facility was the only ongoing business operation of the Lawrence entities.

The SEC claimed that much of the investors’ money went to pay for Lawrence’s “grossly lavish” lifestyle, which included some 50 cars, over 20 boats and expensive gifts to family and friends, including a $330,000 engagement ring for Lawrence’s fiancee.

As receiver, Grassmueck is charged with marshalling the assets of the individual and corporate defendants and distributing them under court supervision. Some 8,500 creditors and investors may have claims against the estate, Grassmueck said. He has reported locating less than $500,000 in cash.

Although the Rosenthals are operating under an agreement with Grassmueck, they have no relationship to HMC, Znetix or any of the other Lawrence companies.

If they succeed in buying the business for the long run, they hope to honor the old HMC memberships, at least in part, Rosenthal said.

For the Rosenthals – both avid fitness buffs and long-time gym members – the operations gives them a chance to settle into a permanent life on Bainbridge Island.

Alexa Rosenthal and Liljeblad have been renting space during the morning in the Island Center martial arts facility, and Liljeblad operated as an independent contractor in the old gym.

Mike Rosenthal has been captain of an Alaska trawler which has taken him away from the island for seven months a year.

“We have two young children at home and a third on the way. We’ve been looking at doing something on the island together forever, and we feel like this is the opportunity.”

His experience at sea provided a lot of the necessary skills, Rosenthal said.

“There is a lot of management experience in running a boat, which is really a small business,” he said.

“And we have never gone into a health club without asking ourselves how we would do it differently.”

They recognize the irony of their present situation – the more successful they are in 90 days, the higher the price the business may fetch at auction.

“We’re very aware of the risk involved, but we feel it may give us a strong position,” Alexa said.

“If somebody was going to do this, we wanted it to be us,” Mike said.

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