Spa Sydell Bankruptcy: Not An Easy Fix, Expert Says

ATLANTA, GA — Spa Sydell, a popular Atlanta-based chain of massage, skin and nail treatment centers, filed for Chapter 11 bankruptcy on Tuesday.

Spa Sydell filed for bankruptcy in 2009 "and emerged with significant liabilities to the IRS," said Greg Charleston, senior managing director for Conway MacKenzie and an Atlanta turnaround and restructuring expert. "The idea of a bankruptcy reorganization is to give a company a fresh start by restructuring the company's liabilities.

"Unfortunately, the IRS obligations were not discharged in 2009 bankruptcy which made Spa Sydell's restart not so fresh."

Spa Sydell has locations in Buckhead, Dunwoody, and Town Center at Kennesaw, as well as Norcross, Alpharetta and Cumming. It is also building a new location in Huntsville, AL, according to the Atlanta Business Chronicle.

Most companies can't survive two bankruptcy filings within a span of seven years, Charleston said. "That second bankruptcy is often sardonically referred to as a Chapter 22," he said.

"Contrary to common understanding, Chapter 11 can be an expensive process," he said. "Secondly, Spa Sydell owes a great deal of money to the IRS, Department of Labor and State of Georgia Revenue. Depending on the nature of these claims, Spa Sydell may again have difficulty discharging these liabilities in a bankruptcy."

And then there's Spa Sydell's intensely personal connection to its customers. "They may have deeper issues with customer loyalty and the value of that brand that a Chapter 11 cannot fix," Charleston said. "I'm not sure what the Spa Sydell's goal in this chapter 11 is but reorganizing the company may be extra difficult this time around."

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