Bally Total Fitness Corp. filed for Chapter 11 bankruptcy protection on Wednesday for the second time in less than two years, hindered by debt and limited refinancing options amid the credit crunch.

The Chicago-based gym operator will use existing cash reserves to continue operating. Bally, which again filed in the U.S. Bankruptcy Court for the Southern District of New York, plans to sell itself or reorganize under Chapter 11.

Early last year, faced with more than $800 million in debt and just $45 million in cash, Bally defaulted on its debt. The company's shares were delisted from the New York Stock Exchange for failing to meet minimum price and market capitalization requirements. Bally also was delinquent in filing its 2006 annual report because of errors in historical member data.

Bally then filed for Chapter 11 under the control of Harbinger Capital Partners Master Fund I Ltd. and Harbinger Capital Partners Special Situations Fund LP, which invested about $233.6 million in exchange for Bally's common equity. It emerged in the fall of 2007 as a private company.

Chief Executive Michael Sheehan, who replaced former CEO Paul Toback this June, said Bally's long-term debt and lack of refinancing options left limited alternatives, despite ongoing efforts to cut expenses and streamline operations.

According to CapitalIQ, Bally's has total debt of $811.3 million and cash and short-term investments of just $70.8 million. Total assets are listed as $411.4 million.

"The burden of Bally's long-term indebtedness, coupled with the lack of refinancing options in today's constrained credit markets, have limited our ability to restructure using out-of-court vehicles, leaving Bally with no alternative other than the actions announced today," said Sheehan in a statement.

The company hopes to emerge from bankruptcy "as promptly as possible."

Bally has retained Kramer Levin Naftalis & Frankel LLP as bankruptcy counsel and Houlihan Lokey Howard & Zukin as financial advisors.