In what Inside INdiana Business Sports Contributor Bill Benner calls "another gut punch to a once-proud organization," Indianapolis-based USA Gymnastics has filed for Chapter 11 bankruptcy protection. The organization says the move is part of a "reorganization" plan and will allow it to more quickly resolve legal claims made by athletes who were victims of sexual abuse by former team doctor Larry Nassar.
In a news release Wednesday, USA Gymnastics says the survivors’ claims against the organization are covered by insurance and the amount of available insurance proceeds will not be affected by the bankruptcy filing. However, the organization claims it has "no other significant assets" that could be used to pay the claims and the filing is the best way to quickly reach settlements with the survivors.
"We owe it to the survivors to resolve, fully and finally, claims based on the horrific acts of the past and, through this process, seek to expedite resolution and help them move forward," said Kathryn Carson, chair of the USA Gymnastics Board of Directors. “Our sport is safer and stronger thanks to the bravery of these women. The Chapter 11 filing and the expedited resolution of these claims are critical first steps in rebuilding the community’s trust."
USA Gymnastics today filed a voluntary petition for protection under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Indiana.https://t.co/HaVOY2xMtk
— USA Gymnastics (@USAGym) December 5, 2018
Carson says the filing will also allow USA Gymnastics to continue its support of current athletes.
The filing is the latest in the saga of the embattled organization, which was accused of covering up the actions of Nassar, who was sentenced to prison on numerous counts of child sexual assault following accusations he molested hundreds of underage athletes, both as the USA Gymnastics team doctor and a physician at Michigan State University.
Earlier this year, USA Gymnastics announced Mary Bono would serve as interim president and chief executive officer of the organization. Bono would resign four days later amid backlash over a controversial tweet she sent earlier in the year.
Carson says the board is "in the process of searching for a new CEO who has the experience to build a leadership team that will restore confidence in USA Gymnastics, and set and execute a clear vision for a successful future."
Additionally, USA Gymnastics says the Chapter 11 filing will allow it to work with the United States Olympic Committee, which last month began efforts to remove the organization as the National Governing Body for gymnastics in the U.S.
"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," said Carson. "USA Gymnastics will continue with its day-to-day operations of directing and managing the sport’s business and implementing initiatives that put the safety and well-being of the athletes at the forefront."
The filing for Chapter 11 bankruptcy protection was made in the U.S. Bankruptcy Court for the Southern District of Indiana.
Benner says, while the scandal “can’t be excused,” USA Gymnastics has had a positive impact on Indianapolis.