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Volume 25 No. 198
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USOC Reacts To USA Gymnastics' Chapter 11 Bankruptcy Filing

USA Gymnastic's bankruptcy filing will end up suspending all civil lawsuits for the time being
Photo: GETTY IMAGES

USOC CEO Sarah Hirshland yesterday said USA Gymnastics’ Chapter 11 bankruptcy protection filing will not change plans to decertify the NGB and that the USOC had little choice but to make the historic move. USA Gymnastics claimed the Chapter 11 filing would temporarily halt the decertification efforts. However, during an appearance at the '18 Learfield Intercollegiate Athletic Forum, Hirshland said, “I don’t know why it would impact the [decertification] process,” she said. “The hearing panel process will continue as scheduled. It doesn’t change our perspective or our commitment to that process.” The USOC issued a statement around the same time that softened its stance somewhat regarding its intent to proceed with decertification efforts. USOC Chief External Affairs Officer Patrick Sandusky said, "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." The bankruptcy filing will end up suspending all civil lawsuits for the time being. USAG is facing at least 100 lawsuits relating to its handling of former team doctor Larry Nassar, who is now serving an effective life prison sentence for abusing hundreds of athletes in his care. USAG says it sought bankruptcy to expedite the payment of legal settlements to the victims. Mediation with victims’ lawyers was not making progress, USAG BOD Chair Kathryn Carson said. "The Chapter 11 filing and the expedited resolution of these claims are critical first steps in rebuilding the community’s trust,” Carson said. “At the same time, the filing will allow us to continue the important work of supporting our outstanding gymnasts at all levels, including the current and next generation of Olympic hopefuls."

FEW ASSETS TO PAY CLAIMS: USAG acknowledges that it has few assets available other than its insurance coverage to pay claims, and also says the availability of coverage proceeds are not affected by the Chapter 11 filing. "We believe that the Bankruptcy Court is the best forum in which to implement appropriate procedures to equitably resolve claims and allocate the insurance proceeds among claimants, allowing resolution more quickly than litigation filed in courts around the country,” the USAG said. USAG expects its legal liability relating to Nassar to be between $75M-150M, according to financial reports filed last month. It reported $18.2M in net assets at the same time. California-based attorney John Manly, who represents many victims, called on investigations elsewhere to continue. “We strongly encourage Congress and the relevant state and local law enforcement agencies investigating this matter to redouble their efforts to uncover the truth and hold all responsible parties accountable,” Manly said. The question of whether the bankruptcy can forestall USOC proceedings is a nuanced one. The decertification process is not a civil court matter. However, USAG will argue that the practical outcome of decertification would be the loss of its membership, effectively its largest asset. “Our ability to be the NGB is a very big part of how we raise our revenue and how we inspire athletes,” Carson said. “I think it’s pretty critical to our continued existence.”