Lenders to Virgin Active are preparing for a fight over the future of one of Britain's biggest gym chains as its owners draw up a radical blueprint to help it survive the pandemic.
Sky News has learnt that a syndicate of roughly half a dozen banks held a beauty parade of financial advisers this week to negotiate a restructuring of the company, in which Sir Richard Branson's Virgin Group is a minority shareholder.
City sources said that Brait, the company set up by one of South Africa's most prominent businessmen, was expected to present a formal restructuring plan to Virgin Active's lenders in the coming weeks.
Brait owns just under 80% of the gyms operator, with Virgin Active's management team holding the remaining shares.
Details of Brait's imminent proposal were unclear this weekend, as was the possibility of an insolvency process called a company voluntary arrangement.
One insider suggested that the lending syndicate was "braced for a messy process".
They added that it was far from inconceivable that the banks which have lent £210m to Virgin Active's Europe and Asia-Pacific operations could ultimately control the business.
Its African operations have a separate financing structure.
Virgin Active's landlords will also be involved in the restructuring talks amid expectations that they are likely to be asked for steep reductions on future rent payments.
The company has been wrestling with the impact of the COVID-19 pandemic on its business, which trades from 240 sites in the UK, Europe, Asia, South Africa and other African countries.
In Britain, it employs about 2,400 people, and operates more than 40 sites which have spent most of the last year shut.
Virgin Active has frozen membership fees during the enforced closures, further squeezing cashflow.
Last year, shareholders including Virgin Group injected about £20m into the business during the first nationwide lockdown.
Virgin Enterprises Limited, the UK-based entity which manages Virgin's brand licensing activities, also deferred royalty fees owed by the fitness chain understood to be valued at more than £10m annually.
It is now seeking tens of millions of pounds of additional funding to enable it to reopen once restrictions ease, although there is no visibility yet about when that might apply to the health and fitness industry.
In a statement this weekend, Virgin Active said it had had a strong balance sheet before the crisis, and that a refinancing soon after the pandemic hit had put it on "a sound footing".
"We are now managing the further impact from this evolving situation around the world, including second lockdowns in the UK and Italy.
"We are in discussions with all our stakeholders, and with their support we look forward to getting back to business as usual across all our territories, enabling the business to benefit from global trends towards health and wellness which are accelerating as a result of the pandemic."
The lenders' move to appoint advisers comes days after Britain's biggest high street lender, Lloyds Banking Group, began moves to offload its debt position in Virgin Active.
A sale is not thought to have been agreed yet.
Virgin Active's 2019 accounts, filed this month, included a warning from KPMG, the company's auditor, about its ability to continue as a going concern.
Deloitte, the accountancy firm, has been advising Virgin Active on talks with landlords since last year and has had its remit extended to encompass the looming restructuring talks, according to a source close to the gyms operator.
It is the latest in a string of Virgin Group companies which have been forced to take drastic steps to secure its future.
Virgin Atlantic Airways, the flagship in Sir Richard's empire, narrowly escaped administration last year, securing a £1.2bn package of support from suppliers, creditor and new investors.
The tycoon's airline in Australia also went through a restructuring process last year.