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USA Gymnastics seeks Chapter 11 bankruptcy protection

USA Gymnastics seeks Chapter 11 bankruptcy protection
USA Gymnastics logo is displayed at AT&T Stadium during an news conference in Arlington, Texas. USA Gymnastics has filed a Chapter 11 bankruptcy petition as it attempts to reach settlements in the dozens of sex-abuse lawsuits it faces. (Ron Jenkins / Associated Press)

Fighting to survive in the wake of the Larry Nassar sexual-abuse scandal, besieged USA Gymnastics on Wednesday filed for Chapter 11 bankruptcy.

The national governing body positioned the move as a way to expedite settlements in numerous lawsuits brought by survivors.

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“We owe it to the survivors to resolve, fully and finally, claims based on the horrific acts of the past,” said Kathryn Carson, who was recently elected chairwoman of USAG’s board of directors.

Carson stated that survivors’ claims will be covered by her organization’s insurance and characterized bankruptcy as the “critical first steps in rebuilding the community’s trust.”

But a California lawyer who represents dozens of victims believes the filing is an attempt to halt proceedings in civil court, where the discovery process might have revealed further damaging information about how sports leaders dealt with the Nassar situation.

“We had key depositions and key witnesses set that I think they wanted to stop,” attorney John Manly said. “This was certainly a way to stop our investigation.”

Hundreds of young athletes have come forward with accusations that Nassar — who worked in various capacities for Michigan State, USA Gymnastics and the U.S. Olympic team — molested them under the guise of providing medical treatment.

The scandal has also prompted lawsuits against Michigan State, which previously announced it would set aside $500 million to settle current and future claims.

In the additional litigation aimed at USAG and the U.S. Olympic Committee, victims claim the amateur sports organizations ignored early indications of Nassar’s criminal acts, which spanned many years.

USAG leaders said Wednesday that, apart from available insurance proceeds, they have no other assets that could be used to pay claims.

The organization has struggled with internal turmoil, cycling through leadership changes and suffering public embarrassments.

The USOC recently began a potentially lengthy process that could ultimately revoke USAG’s status as the governing body for gymnastics in this country. Carson expressed hope for a solution that would allow her organization to remain in place.

“We look forward to future conversations with the USOC to demonstrate our commitment at all levels to strengthening the organization and making gymnastics the best it can be for athletes at all levels,” she stated.

A USOC spokesman said: “We are aware of the USA Gymnastics bankruptcy filing and we are reviewing the filing.”

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