NEW YORK, March 5 (Reuters) - Home fitness company

BowFlex ( BFX ) filed for Chapter 11 bankruptcy protection late

Tuesday, with an agreement to sell the company for $37.5 million

to Johnson Health Tech.

The Vancouver, Washington-based company benefited from a

spike in demand for treadmills, stationary bikes, and

weightlifting equipment during the COVID-19 pandemic in 2020, as

consumers stopped gathering in gyms and exercised at home.

But the spike in demand was a double-edged sword, according

to the company's court filings. BowFlex ( BFX ) ramped up production in

2021 after finding itself unable to meet customer demand for its

products during the 2020 holiday season, but then found itself

with excess inventory as demand slackened and retailers canceled

their advance orders.

BowFlex ( BFX ) also suffered from increased competition in a

"saturated" post-pandemic market for exercise equipment and from

a rise in interest rates, according to its court filings.

BowFlex ( BFX ) entered bankruptcy with $140 million in assets and

$126 million in liabilities, according to a Chapter 11 petition

filed in bankruptcy court in Camden, New Jersey.

BowFlex ( BFX ) sought to streamline its business in 2023, laying

off about 15% of its employees and selling its Nautilus brand

for $10.5 million. It currently has about 330 employees, and it

sells BowFlex ( BFX )-branded equipment and Schwinn exercise bikes.

BowFlex ( BFX ) has been seeking a buyer since 2021, and it will

conduct a bankruptcy auction to see if any buyer is willing to

pay more than the $37.5 million offer from Johnson Health Tech.

"We are fortified by the potential partnership with Johnson

Health Tech and encouraged by the multiple parties that have

indicated an interest in bidding for our Company," BowFlex ( BFX ) CEO

Jim Barr said in a statement on Wednesday.

BowFlex ( BFX ) has lined up a bankruptcy loan that will provide the

company with $9 million in new money, while also restructuring

some of BowFlex's ( BFX ) existing debt.