Nikolaos Solomos, the founder of the Australian fitness chain Derrimut 24:7 Gym, secured a substantial director's loan of $14 million just before the precarious financial state of his empire was made public, leading to its administration.
A Fitness Empire Built on Debt
Mr Solomos, who launched the gym chain in 2010, ultimately handed control to administrators from HM Advisory after a promised bailout from controversial billionaire Adrian 'Lambo Guy' Portelli failed to materialise. According to documents filed with the Australian Securities and Investments Commission (ASIC), the administrator informed creditors that various loans linked to the company totalled $29 million.
The administrator, Mr Dixon, detailed that the largest expenses for the companies were wages, rent, and interest, culminating in a $2 million loss for the last financial year. He pinpointed an "aggressive expansion strategy" and a "management structure that failed to scale with the rapid growth" as primary causes of the financial disaster.
Mounting Debts and a Failed Rescue
The financial strain was exacerbated by increasing fixed costs and trade disruptions during the Covid-19 pandemic. The list of creditors is significant, with the Australian Tax Office claiming $14.9 million and Bourke Street Properties asserting it is owed a staggering $59.1 million. In September, it was revealed the tax office was seeking to claw back $12.5 million in unpaid superannuation and penalties.
Despite the crisis, a potential investor is considering a rescue proposal, and a third party has agreed to fund trading losses, allowing the gyms—which boast around 200,000 members across more than 25 locations in South Australia and Victoria—to remain open for now. Administrators confirmed existing member contracts would be honoured during this period.
Social Media Speculation and Member Anxiety
The saga has played out publicly on social media. Mr Solomos has repeatedly assured followers the chain is not shutting down, despite at least four closures. In a recent Zoom meeting, he blamed former staff for the financial woes, telling fitness instructors the debt was "under control."
Speculation of a rescue peaked in September when billionaire Adrian Portelli posted a cheeky video arriving at a Derrimut gym with a box labelled "FIRST DAY AT WORK." However, his subsequent cooling on the deal appears to have sealed the fate of the struggling business. The uncertainty has prompted members to voice concerns on platforms like TikTok, worrying about the future of their $299 upfront memberships.
Founded with the aim of providing a premium fitness experience, Derrimut 24:7's story is a cautionary tale of rapid growth, leveraged finance, and the high-stakes search for a white knight investor in a competitive industry.
