USA Rugby officially filed for Chapter 11 bankruptcy yesterday, claiming liabilities of $6M against assets of $1.1M. The NGB’s biggest creditor is World Rugby, the sport’s international governing body, which is owed $3.6M. USA Rugby has long struggled with financial instability but now points to the impact of coronavirus for forcing it to seek bankruptcy protection.
USA Rugby as of Feb. 1 had projected it would be able to operate until a planned recapitalization in May thanks to cost-cutting efforts, “including freezing certain credit lines, layoffs, and a reduction in corporate travel.” That timeline fell apart as a result of coronavirus-related shutdowns, as all sanctioned activities were suspended on March 13. USA Rugby made “substantial layoffs” on Mar. 27.
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According to the bankruptcy filing, USA Rugby’s debt load spiked when the '18 World Cup Sevens tournament in S.F. faced “a series of cost-overruns and revenue shortfalls.” In response, World Rugby provided $4.4M in unsecured funding to shore up USA Rugby’s finances. World Rugby provided an additional $1M in '19, after the U.S. Men’s 15 team overspent its $2.1M budget by some $750,000 and the NGB suffered flagging donations, which fell 50% short of expectations.
USA Rugby hopes to maintain insurance coverage and control of its cash management as it reorganizes. According to its list of creditors, USA Rugby owes more than $480,000 in outstanding insurance premiums and legal fees. The NGB is currently contesting a $40M breach of contract lawsuit from United World Sports.
