S&P Global Ratings lowered its debt rating on 24 Hour Fitness Worldwide Inc. after the fitness chain did not make its June 1 interest payment on its senior notes due 2022.

S&P’s issuer credit rating was lowered to ‘D’ from ‘CCC+’

24 Hour Fitness entered into a 30-day grace period with its lenders, but S&P said it’s unlikely the chain will make the payment within the 30-day grace period and is also unlikely to make upcoming interest payments on its first-lien obligations.

The rating agency said, “We lowered the issuer credit rating to ‘D’ because we believe the company will fail to pay its debt service obligations as they come due. We believe that COVID-19-related fitness club closures have materially impaired the company’s liquidity position. In addition, there are credible press reports the company is seeking a debt restructuring or Chapter 11 bankruptcy filing. While the company is current on its senior secured term loan and revolver, substantial doubt exists whether the company will make its interest and amortization payments on these facilities, due on June 30 and July 17, respectively.”