Jenny Craig to shut shop doors, make staff redundant

Jenny Craig went into voluntary administration last month. Photo / 123RF

Embattled diet and weight-loss company Jenny Craig’s New Zealand arm has failed to sell and job losses are likely with the administrators’ recommendation to liquidate the business.

The company, founded by Jenny and Sidney Craig in 1983, went into voluntary administration last month, with FTI Consulting’s Vaughan Strawbirgde, Kate Warwick and Joseph Hansell appointed.

Their appointment came just five days after the fitness business announced its Australian and New Zealand branches would continue to function following confirmation its corporate offices in the United States would close. Its US subsidiaries declared Chapter 7 bankruptcy in early May.

In mid-March, Strawbridge said the sale was “well-progressed” and they were working with several parties interested in taking the businesses forward.

Administrators tried to sell the company but found possible buyers were wary of taking on business given the ambiguity over the right to use the trademarked Jenny Craig brand.

“We immediately sought expressions of interest for the sale ... of the company in the limited timeframe available to us. This resulted in 15 interested parties,” FTI’s report said.

“We simultaneously held discussions with the US trustee appointed over Craig Holdings Inc to clarify the ongoing right to use their Jenny Craig brand and trademark on an ongoing basis.

“Given the uncertainly with respect to the continued use of the Jenny Craig name to trade the business, interested parties were unable to get comfortable with taking on whole or a substation portion of the business.”

FTI’s recommendations were revealed on Wednesday, with administrators able to make a decision on the sale in a second meeting with creditors next week.

Jenny Craig has told staff they would close stores and they would be made redundant.

The company’s online capability will be sold to healthcare technology startup Eucalyptus, which will provide customers with online weight loss treatments.

The weight management company was established in 1983 by an Australian woman Jenny Craig and her husband, Sidney. Since then, it has become one of the most well-known weight loss brands worldwide.

It promoted its food and exercise goods by utilising celebrities like Rebel Wilson and Mel B, from the Spice Girls.