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With debts of over $15 million, companies trading as UFC Gym Australia and New Zealand have been ordered into liquidation by the NSW Supreme Court.

The collapse of the gym chain comes six months after external administrators first took over the business amid a lengthy legal fight, with filings with the corporate regulator showing 62 creditors owed a total of $15.6 million.

UFC Gym Australia had gone into administration in May after a Court ordered the business to pay $5.2 million to three franchisees when the company and its directors were found to have “engaged in misleading and deceptive conduct” during the process of selling franchises in the Federal Court found.

One of UFC’s Directors, Sam Husseini, has been reported as being in the process of trying to appeal this.

However, reporting by News Ltd indicates that the three litigating franchisees - from Balcatta in Perth, and Castle Hill and Blacktown in Sydney - have issued a notice to Husseini with intentions to bankrupt him.

They trio are understood to have already caused Husseini’s fellow director Mazen ‘Maz’ Hagemrad to declare bankruptcy.

Last week saw the NSW Supreme Court appoint Desmond Teng and John Refalo of insolvency firm Byrons as liquidators of the chain’s parent companies, Ultimate Franchising Group Pty Ltd, Ultimate Franchising Group Properties Pty Ltd and UFC Gym Prospect Pty Ltd.

These companies held the master franchise agreement for operations in Australia and New Zealand, once operating more than 10 franchised gyms in Sydney, Melbourne, Perth and the Gold Coast.

A spokesperson for UFC Gym insisted this would not impact the gym’s franchises and was only a blow to their main headquarters.

The spokesperson told News Ltd “(this) decision … only impacts head office. It has no implications for operations.”

A related entity called Train Different Pty Ltd proposed a deed of company arrangement (DOCA) which would see creditors receive one cent for every dollar they were owed.

Control of the business then reverted back to the directors.

However, Teng has advised that the DOCA’s return was “very uncommercial”, resulting in the Supreme Court ruling in favour of creditors, noting “the DOCA is now terminated by a court order.”

He said that his investigations are in their infancy and he has not yet made a decision about whether to shut down operations.

Teng noted we are “trying to work out the best way going forward, working with all the stakeholders, including the franchise stores.”

In early May, Justice Tom Thawley from the Federal Court of Australia ruled in favour of the three disgruntled franchises after a four-year legal battle against the master franchise holder of UFC Gym Australia and New Zealand.

Repeated inquiries by Australasian Leisure Management to UFC Gym Chief Executive Adam Sedlack and fitness conglomerate New Evolution Ventures - part owners of the UFC Gym brand - have not generated any response.

Meanwhile, Sedlack continues to promote growth international opportunities with UFC Gyms.

Images: UFC Gyms (top) and UFC Gym Chief Executive, Adam Sedlack (below).

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