By Chelsea Emery

Judge Stuart Bernstein heard and granted the company's first-day motions, allowing the Bally clubs to continue operations. But the case on December 9 will move to Judge Burton Lifland, who will rehear the motions.

On Wednesday Bally filed for bankruptcy protection for the second time in 17 months.

Bally is currently in discussions with members of the first-lien bank group to receive debtor-in-possession financing in connection with a sale of the company, Bally's attorney Kenneth Eckstein told reporters after the hearing at the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. Eckstein declined to be more specific.

"We are in active discussions with parties," said Eckstein. "The company is going to be evaluating that transaction."

If the deal went through with the parties currently in negotiations, it would occur within about 45 days, Eckstein said.

Judge Bernstein granted the company's request to access its cash collateral until the next hearing. Bally has $17 million in cash in its bank accounts and is expecting to receive about $3.5 million more over the next 35 days, according to court documents.

The cash will be used to operate the business.

Additionally, the company can pay employees for pre-petition

salaries and the judge approved the company's request to continue honoring its bonus-points program.

(Reporting by Chelsea Emery, editing by Gerald E. McCormick)