No soap, no classes, no refunds: Derrimut members seethe as gym chain falters

Members of Derrimut 24:7 Gym are complaining of deteriorating facilities and are demanding refunds as the company faces more site closures in its struggle to keep up with spiralling financial strife.

An investigation by The Age revealed last week that the rapidly expanding Melbourne-born gym empire has been failing to pay taxes, staff superannuation and hundreds of businesses and landlords, while its owner Nick Solomos has over several years been withdrawing millions for personal expenses.

Solomos’ company accounts have been used for $5000-a-week pocket money, to make mortgage payments on his $40 million property portfolio, to fund more than $30,000 a week in payments to his ex-wife and to give luxury cars to senior staff.

The Australian Tax Office (ATO) is seeking to liquidate Derrimut’s primary operating entity as well as a now-dormant company to claw back $15.4 million in tax debts, including unpaid superannuation and penalties.

Solomos is scrambling to secure financing to save his business from liquidation, telling creditors a deal is close.

Beyond the pain being felt by business owners, many everyday gym members – which number about 200,000 – are dealing with a souring experience.

Complaints posted online detail badly maintained facilities and poor bathroom hygiene. Insiders say the company struggles to keep up with bills for toilet paper and hand towels, which WorkSafe has flagged as a concern.

The Age spoke to several members about their experiences with the gym, all of whom requested to withhold their surnames to discuss the company which is popular for its barn-like facilities and cheap annual memberships.

Melbourne-based Renzo paid almost $150 earlier this year for his annual membership at Derrimut’s Oakleigh East gym, the company’s busiest venue, but said he didn’t plan to stay on, preferring to pay more for a better service.

Renzo said his biggest gripe was that almost half of the men’s lockers had their doors ripped off or were broken. When he contacted head office, it took a month to get a response which he considered to be unsatisfactory.

He said paper towel dispensers to wipe down gym equipment were often empty, machines were frequently broken, the men’s bathroom was inexplicably wet and the ice plunge pools were yanked out with tubing still hanging from the wall.

“This feels like a sinking ship going down fast, over-promising without the means to provide or the care to do anything,” Renzo said. “They advertise it as a gym that’s awesome with all these facilities, but … they are not looked after.”

Fellow gym-goer Georgia said she was pursuing a refund on her $150 membership after her favoured Pilates classes were wound back before they disappeared altogether, with none scheduled for about three weeks.

Slashing group fitness classes was among a spate of cost-cutting measures Derrimut implemented this year at some of its gyms, as well as reducing staffed hours and cleaning shifts.

Georgia said she now had no reason to set foot in the gym.

“I’m really annoyed because I prepaid a whole year in advance … and I’m not getting anything for it now,” she said. “It’s just dead money.”

Her impression of the gym was that it was going downhill. “It felt like it was just chaos, like there was no order any more.”

Georgia started emailing Derrimut’s head office months ago about her concerns and now, having joined a new Pilates studio, she is trying to get her money back. “I haven’t heard back from them in literally months.”

Coolaroo member Mohamed said while he enjoyed the large facility, the gym appeared to be in a “death spiral”.

He started bringing his own antibacterial wipes for his workouts because there hadn’t been hand soap for three months: “It’s a health risk. Men go to the toilet … and then use gym equipment.”

Zak had been a member of the Angle Vale gym in South Australia, which abruptly closed in July due to unpaid rent, with about three months left on his 14-month membership.

After regularly asking for a refund, Zak said it was only when he threatened to complain to the consumer watchdog that he was last week offered a partial reimbursement.

He said he received multiple emails in April trying to get him to extend his membership.

“Luckily I didn’t,” he said.

Zak said he was angry and wanted to see the business and its owner take accountability for its mistakes: “Just be honest, admit you f---ed up and maybe I’ll have some sympathy,” he said.

Some fitness instructors said they had not been paid for several weeks. Earlier this month they received an email from the company pledging to pay their invoices within four weeks and restart the classes.

“[We] are in the process of securing short-term finance as part of a debt restructure,” the email said.

One instructor, who spoke on the condition of anonymity, said they had a feeling they were being strung along.

“I’ve been cancelling all my classes because I’m worried I’ll never get paid.”

Derrimut is waging battles on multiple fronts. On Friday, Solomos was granted a three-week reprieve when the Australian Tax Office’s push in the Federal Court to wind up Derrimut Health & Fitness was adjourned for a second time. Six organisations have so far joined to support the tax office’s action, with claims totalling $1.7 million.

Derrimut executives have this month been claiming to creditors that the tax office will withdraw its wind-up application and that the business is in the process of securing funding to pay down debt.

After already being locked out of four sites across Victoria and South Australia since July – including two that had not yet opened – another Derrimut venue was forcibly closed on Thursday due to unpaid rent, this time at its gym in Adelaide’s Noarlunga.

According to The Advertiser, the company is also fighting in Adelaide’s District Court to prevent a landlord from shutting its Melrose Park gym.

The string of closures is not the end of Derrimut’s troubles in South Australia. Earlier this month, the company filed action in the Federal Court to set aside a legal demand from construction company Ikonstruct SA over claims the gym business failed to pay for building works.

A representative of Ikonstruct declined to comment when contacted by this masthead because the matter was before the courts.

Neither Derrimut nor the tax office would comment when approached by The Age.

The matter returns to the Federal Court on October 10.

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