Comeback for failed Topnotch clubs

MATTHEW Harris, founder of health clubs operator Topnotch, is making a comeback just three weeks after the Alternative Investment Market-quoted company was forced into administration with debts of £6m.

The chain, which was started by Harris in 1991 with a club in Middlesex, ran into financial problems more than a year ago after spending millions on rapid expansion. It was forced to throw in the towel last month after failing to break a deadlock with creditors over a financial rescue.

Harris, however, is back in the driving seat after raising about £3.8m from a group of private investors to acquire most of Topnotch's clubs, including several in London, from administrators RSM Robson Rhodes.

This will still leave an estimated £3m of unpaid debts at Topnotch but joint administrator Mike Oldham said that Harris's consortium had made the highest offer in an auction that attracted 10 separate bidders.

That will come as cold comfort to the hundreds of investors who bought shares in the company, which came to market three years ago. The share price peaked above 200p.

Investors are likely to face a total loss on their shares and the group's bankers, NatWest, will pick up most of the cash raised from the auction.

Harris, who says he has invested a 'substantial' six-figure sum in the new venture, blames Topnotch's landlords for its demise. 'I spent a lot of time trying to renegotiate the huge rental commitments the company faced from landlords, but they failed to play ball,' he said.

With a second chance in his grasp, he is determined not to repeat mistakes made at Topnotch, which acquired a reputation for buying sites at over-inflated prices in an unsustainable economic boom. 'We will be able to plan our future for the long term and have some exciting new ideas,' he said.

The new privately-owned company, Topnotch Fitness, aims to focus on health-conscious people aged between 25 and 35. The clubs, located as far apart as Croydon and Bristol, will continue to trade under the Topnotch brand.

'These are successful and profitable clubs and there will be significant changes made to them,' Harris promised.