Bankruptcy Protection for USA Gymnastics

(ATR) In a move that is claimed will expedite resolution of the sexual abuse crisis for USA Gymnastics, the organization has filed for Chapter 11 bankruptcy protection.

The national governing body for gymnastics in the U.S. faces more than 100 lawsuits involving 350 athletes. They all stem from the sexual abuse carried out by the former team doctor over a period of years, ending in 2015. Larry Nassar is now in a maximum security prison, sentenced effectively for the rest of his life.

"The filing enables us to expedite an equitable resolution of the claims made by the survivors of sexual abuse perpetrated by Larry Nassar. We owe it to these brave women who have come forward. At the same time, the filing will enable USA Gymnastics to continue the important work to support our gymnasts at all levels, fully operating and meeting its responsibilities to the entire membership," says USA Gymnastics.

A question and answer page on the organization website tries to put the best light on the latest twist of an agonizing saga.

Since the apprehension, conviction and imprisonment of Nassar, USA Gymnastics has crumbled as an organization.

The search is on for its third CEO in just over a year. The U.S.Olympic Committee has initiated proceedings to banish USA Gymnastics.

"We are aware of USA Gymnastics bankruptcy filing and we are reviewing the filing ," says a statement from USOC external relations director Patrick Sandusky.

"Financial stability and viability are essential for a national governing body to operate in the best interests of the athletes. We are reviewing the effects of the bankruptcy filing on the pending proceeding to revoke USA Gymnastics’ recognition as the national governing body for Olympic gymnastics in the United States.

"As the leader of the Olympic community in the United States, the USOC is committed to fulfilling its responsibility and obligation to ensure that each organization accepted for membership as a national governing body has the capacity and capability to provide the support, protection, and services that we expect for all Olympic athletes in the United States," says the USOC statement.

The latest federal tax form filed by USA Gymnastics covers 2017. It indicates a loss of $1.4 million after revenues of $25 million.

The audited financial statement of the NGB covering 2015 to 2016 includes a $75 million contingency to settle lawsuits arising from the sexual abuse.

Among the creditors supposedly owedmoney by USA Gymnastics is Steve Penny, former CEO who was in charge during the time of Nassar’s predations. Financial records indicate he is still owed $340,000 severance pay following his resignation in early 2017. Since then questions about his knowledge of the abuse have mounted. Two months ago he was arrested and charged with evidence tampering in connection with abuse allegations.

Despite the financial challenges, USA Gymnastics says it has the means to carry forward with its day-to-day operations and expenses. This includes funding for programs around the country.

And while the NGB may be reeling from the scandal, the US women’s team at the international level may be the best ever. Superstar Simone Biles is expected to lead the team on the way to more gold medals at the Tokyo Olympics in 2020.

USA Gymnastics says the bankruptcy will not affect the competitiveness of the U.S. in international competitions.

The bankruptcy filing will put a stop to civil lawsuits that have been filed in several states. If all parties can agree to the terms, the negotiations will take the place of multiple trials that could take years to complete. There is no certain time to complete this bankruptcy filing either, but it still could prove more expeditious.

Reported by Ed Hula.