Lithe Method Founder Lauren Boggi Declares Bankruptcy
Devotees of the insanely popular fitness cult Lithe Method and its unnervingly cheery leader, Lauren Boggi, were horrified recently when Boggi announced that, thanks to a messy legal dispute, Lithe was no more.
As Boggi told clients in a late-December email, the landlord of Lithe Method’s never-opened New York outpost had obtained a $400,000-plus judgment against her and reportedly seized her bank accounts and assets. Well, the situation has only grown bleaker: Boggi has declared personal bankruptcy.
Last week, the 39-year-old Rittenhouse Square resident filed for Chapter 7 in the Eastern District of Pennsylvania’s United States Bankruptcy Court. In her filing, Boggi claims that she has less than $50,000 in assets but as much as $1 million in debt. That’s some unfortunate math.
Chapter 7, also known as “liquidation bankruptcy,” is the most common type of bankruptcy filed, in which a debtor’s assets are sold off and used to pay off creditors to whatever extent possible.
“You use Chapter 7 if you really have nothing and you just want to walk away and get a fresh start,” says Fox Rothschild partner Michael Viscount, who has been involved in such notable bankruptcies as Revel’s and Trump Entertainment’s. But, notes Viscount, that fresh start doesn’t exactly come easily.
“The fact that you filed bankruptcy lasts forever,” he explains. “A lot of people have the misconception that after a period of time, it goes away. It does not. Forever, any time she fills out a credit application, she will be asked if she filed bankruptcy.”
Despite shuttering Lithe Method and declaring bankruptcy, Boggi continues to heavily promote and run LB Active, a “virtual workout platform” that she launched last July. Be Well Philly, our health and fitness channel, once asked Boggi why the new name instead of capitalizing on the Lithe Method brand that she had made so strong. “Lithe Method was never constructed to be a virtual workout,” she told Be Well editor Adjua Fisher back then. “It’s our live, studio experience and the lifestyle brand around it … LB Active is another type of brand.”
Lithe Method was undoubtedly the biggest fitness brand in the entire region, but no bank is likely to give her a business loan any time soon, in spite of her reputation among healthy types who drink green shakes for dinner. It remains to be seen what will happen to LB Active in light of the bankruptcy.
“The effect of her case is very uncertain as of this time,” Boggi’s attorney Michael Cataldo told us on Monday.
“Filing for bankruptcy wouldn’t necessarily threaten the new business, but it would definitely complicate things,” adds University of Pennsylvania bankruptcy expert David Skeel.
Fox Rothschild’s Viscount concurs. “Her creditors would certainly be interested in knowing how she was earning a living through a business that is very similar to the other business,” he says.
But to Boggi, there’s no issue.
“This guy is a monster who has made it clear that he wants to do me in,” Boggi tells Philly Mag, referring to her New York landlord, the man she says is responsible for the downfall of Lithe Method. “But LB Active is a separate company that’s not even owned by me. I learned a lot through all of this, and one of those things is this: Keep everything as separate as possible.”
As the bankruptcy case grinds its way through federal court, many of Boggi’s biggest fans are struggling without Lithe Method in their lives.
“I feel bad for them,” Boggi says. “A lot of them are running around the city looking for a replacement. For a lot of them, in-home workouts just don’t work, so LB Active is not a good fit for them. But there’s nothing I can do.”
Follow @VictorFiorillo on Twitter