A U.S. federal bankruptcy judge has approved Bally Total Fitness Holding Corp.'s reorganization plan, clearing the way for the U.S. health club operator to emerge from Chapter 11 under its lenders' control. Judge Burton Lifland of the federal bankruptcy court in Manhattan confirmed the plan at a hearing yesterday. An outside spokesman for Bally said the Chicago-based company expects to emerge from court protection in late August or early September. According to court papers filed last month, JPMorgan Chase & Co. was to get 50.5 per cent of the common stock of a reorganized company, while Anchorage Advisors LLC, a New York-based hedge fund, was to get 33.7 per cent. The plan would also reduce Bally's debt by at least $660-million (U.S.). Bally filed for protection from creditors last Dec. 3, its second such filing in 17 months, after tight credit markets and falling membership left it facing what it called a liquidity crisis.
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