Vu Thi Thuy Linh, the CEO of Lamita Fitness, said the main reason for the failure has been Covid-19 and not internal problems but admitted she was at fault for not realizing the risk of expanding the business despite the pandemic.

"The pandemic has left the company unable to revive, resulting in cash flow imbalance and unpaid wages, and so we had to make the decision to shut down," Linh said.

"If we had not relied on the investment fund but on ourselves, developing steadily just like seven years ago, then maybe all of these regretful outcomes could have been avoided."

Founded in 2012, Lamita started off as a dance center called Zumba Hanoi. In 2018 restructured, changed its name to Lamita and developed the Lamita Fitness, Lamita Star, Lamita Shop, and La Pham brands.

It used to have 65 studios and 200 employees before the pandemic outbreak. But, starting in July 2020, it began to close some and cut staff since it was unable to pay their wages as Covid-19 hit cash flows. By August only 16 studios were left.

In 2019, Linh persuaded Do Thi Kim Lien, chairman of Song Duong Surface Joint Stock Company, and Pham Thanh Hung, chairman of Century Real Estate Investment and Development Joint Stock Company, to invest VND10 billion ($435,000) for a 35 percent share in Lamita Fitness, but the former failed to bring in the money as promised.

At the end of 2019, Lamita Fitness got in touch with a domestic investment fund. In February 2020 it got its business appraised and was valued at VND100 billion. Linh claimed that the fund had agreed to invest VND30 billion for a 30 percent stake.

Then, a month later, Covid-19 broke out and Lamita found itself mired in difficulties since, despite not receiving the investment from the fund, it had to maintain the growth it had committed to. It thus had to pay growing rents and staff salaries despite having little income.

When the Government imposed social distancing, it retained all its studios and staff thinking the pandemic would soon pass. In the middle of 2020, it reopened, but business was non-existent and the lack of cash flows was beginning to tell.

Linh plans to revive Lamita, reduce its scale and launch online products. It has agreed to refund the fees people paid for dance lessons, but those staying back can get a 50 percent discount when the next course starts.

Lamita is the first business in the fitness industry to fail in 2021. Last year WeFit, an application connecting gyms and spas, went bankrupt due to Covid-19.