Issues of Jenny Craig branding stalled potential deals to save weight-loss company

Jenny Craig made staff redundant after going into administration. Photo / 123RF

Issues around branding and whether a potential buyer could use the Jenny Craig name stalled four potential deals to save the weight-loss company.

On May 9, FTI Consulting’s Joseph Hansell and Vaughan Strawbridge were appointed as administrators of Jenny Craig Weight Loss Centres (New Zealand) as well as the Australian arm.

Their appointment came just five days after the brand said its Australian and NZ branches would continue to operate after confirmation it was closing its corporate offices in the United States. Its US entities filed for Chapter 7 bankruptcy in early May.

The company, backed by HIG Capital, struggled to maintain enough cash in recent months as it stared down a first-lien term loan in October 2024.

It had searched for a buyer and held active discussions with lenders to rework roughly US$250 million ($403m) of debt. Its Canadian branch had also gone into liquidation, owing creditors C$324m ($386m).

The company was founded by Australian Jenny Craig and her husband Sidney in 1983. It is famous for using celebrities like Magda Szubanski, Rebel Wilson and Mel B to promote its products.

Tried to sell it

Hansell and Strawbridge had tried to sell or recapitalise the two arms, which resulted in 15 interested parties, four of which submitted non-binding indicative offers.

However, the administrators ended up recommending to creditors that the businesses be put into liquidation because the first liquidator report said Jenny Craig Holdings Inc – the parent entity – held all the trademarks for the use of the Jenny Craig brand.

“Despite numerous attempts to seek clarity with respect to the ongoing right to use the brand, either indefinitely or over a period to enable a rebranding of the business, the administrators were not able to obtain the clarity sought, and in turn, could not provide any certainty with respect to the use of the brand going forward to interested parties,” their report said.

Given that uncertainty, they said, interested parties were unable to get comfortable with taking on the business.

As a result, stores were closed and staff were made redundant on June 7.

Meanwhile, the database owned by the Australian entity and certain training materials and access to the rights on its website domain were all sold.

The amounts

In terms of assets, the administrators had received $234,000 in insurance proceeds of which $184,000 would be available to preferential creditors.

Staff, through wages, leave entitlements and redundancy, were owed about $461,000. Of that, $11,000 was made up of wages.

The NZ entity owed the Australian entity $15.1m, with unsecured creditors owed $709,000.

More than 60 creditors, including Tainui Group Holdings, were listed in the report.

“Based on the quantum of assets realisations to date, it is unlikely that funds will be available for unsecured creditors,” the report said.

The liquidators are expected to be finished within 12 months.