USA Gymnastics files for bankruptcy, plans to fight to preserve certification

Larry Nassar stands as he is sentenced for three counts of criminal sexual assault. Photo / Getty

Facing 100 lawsuits from more than 350 sexual-assault victims of team physician Larry Nassar, USA Gymnastics filed for bankruptcy today, a procedural move that its chairman said will expedite payment of claims.

"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, who last week was elected chair of USA Gymnastics' Board of Directors

In addition, the Chapter 11 filing will put on hold the U.S. Olympic Committee's effort to dismantle the sport's governing body, according to Carson, providing "breathing room" for the organization to continue running the sport at a grassroots and national level.

The bankruptcy filing does not represent a surrender by USA Gymnastics of its role as the sport's national governing body. Carson said the governing body is continuing its search for a president and CEO and is moving forward with daily business.

She characterized it as "a critical first step" toward rebuilding the organization's trust with gymnasts and their families, the public and corporate sponsors, many of whom fled the sport in the wake of the Nassar scandal.

Carson declined to provide an estimate of the payouts the governing body will make to the gymnasts who were victimized by Nassar under its watch.

Earlier this week, Michigan State paid US$500 million into a settlement fund to compensate Nassar victims under its watch. In both cases, leaders at Michigan State and USA Gymnastics ignored allegations of abuse for years and failed to turn over reports of abuse to law enforcement in a timely manner.

Insurance purchased by USA Gymnastics prior to the Nassar scandal will cover the cost of the settlements, Carson said. The amount will not be affected by the Chapter 11 filing. But apart from those insurance proceeds, she added, the organization has "no other significant assets" available to pay claims.

Carson said the board had discussed the step of filing for bankruptcy protection for some time, prior to the USOC's Nov. 5 announcement that it was taking the initial step toward dismantling USA Gymnastics, having lost faith that it could effectively serve the sport after a series of missteps.

Carson said the mediation process with some of the litigants was "not moving at any pace" and that a bankruptcy proceeding would be more expeditious than resolving lawsuits filed in multiple courts around the country. A Chapter 11 bankruptcy process, she said, would consolidate the claims before one judge in one court who likely would appoint a mediator to work toward a resolution.

The move comes 20 months before the 2020 Tokyo Olympics, where the U.S. women's gymnastics team will seek its third consecutive Olympic gold medal, and reigning all-around champion Simone Biles will attempt to defend her title.

Both the U.S women and Biles are favorites to do so, with the U.S, women dominating the 2018 world championships in Qatar in October, claiming the team title and Biles earning a record fourth gold in the individual all-around.