Wobbling USA gymnastics files for bankruptcy

In a financial report earlier this year, auditors for USA Gymnastics estimated the potential cost of the federation's litigation to be between US$75 million (S$102.8 million) and US$150 million, though lawyers involved in the lawsuits say those numbe
In a financial report earlier this year, auditors for USA Gymnastics estimated the potential cost of the federation's litigation to be between US$75 million (S$102.8 million) and US$150 million, though lawyers involved in the lawsuits say those numbers are laughably low.PHOTO: AFP

Association says move aimed at settling lawsuits brought by Larry Nassar's victims

LOS ANGELES • USA Gymnastics said on Wednesday it had filed for bankruptcy protection as the embattled governing body continues to grapple with the aftermath of the Larry Nassar abuse scandal.

In a statement on its website, USA Gymnastics said it had filed for Chapter 11 bankruptcy in Indiana in order to settle lawsuits brought by Nassar's victims.

"This filing will enable USA Gymnastics to continue to support its athletes, to fully operate and meet its responsibilities to the entire membership and to expeditiously resolve the claims made by the survivors of sexual abuse perpetrated by Larry Nassar," the organisation said in a statement.

"We owe it to the survivors to resolve, fully and finally, claims based on the horrific acts of the past and, through this process... expedite resolution and help them move forward," added Kathryn Carson, recently elected as chair of the USA Gymnastics Board of Directors.

In a financial report earlier this year, auditors for USA Gymnastics estimated the potential cost of the federation's litigation to be between US$75 million (S$102.8 million) and US$150 million, though lawyers involved in the lawsuits say those numbers are laughably low.

Carson said payouts to victims would be covered by the federation's insurance, and will not be affected by the bankruptcy filing.

Besides the insurance money, she said the federation has "no other significant assets" to pay the victims. In Wednesday's bankruptcy filing, the organisation listed its liabilities and its assets each at between US$50 million and US$100 million.

However John Manly, an attorney who represents many survivors of Nassar's crimes, challenged the suggestion that USA Gymnastics had sought bankruptcy to speed up resolution of cases.

In comments e-mailed to AFP, he said the move was an effort to thwart investigators from uncovering the truth of the Nassar scandal.

"Despite what USAG says, bankruptcy is not a method for resolving claims more quickly," Manly said.

"It is a delay tactic designed to stop survivors from getting information through depositions and document requests.

"It is a cynical extension of USAG's campaign to hide their participation in the Nassar scandal from Congress, the media and the public."

USA Gymnastics is fighting for its survival after the United States Olympic Committee last month vowed to disband the organisation over its failure to reform following the Nassar abuse case.

Former US team doctor Nassar was jailed for life earlier this year after abusing more than 250 athletes, including several stars of the United States' gold medal-winning teams at the 2012 and 2016 Olympics.

USA Gymnastics, which had been accused of covering up Nassar's crimes, has been in a state of perpetual crisis ever since the scandal erupted.

Manly also dismissed Carson's assurances that USA Gymnastics was committed to protecting athletes, calling for a change of leadership.

"The bankruptcy filing follows more than two years of organisational chaos and attempts to cover up the Larry Nassar scandal by destroying key documents, issuing false statements to the public, obstructing criminal investigations and attempting to silence victims of child sexual abuse," Manly wrote.

"They have never reached out to survivors or attempted to work with us to rebuild the trust of sponsors and the public.

"The leadership of USA Gymnastics has proven itself to be both morally and financially bankrupt.

"They must be replaced with an organisation that will place the health and safety of athletes above money and medals."

AGENCE FRANCE-PRESSE, NYTIMES

A version of this article appeared in the print edition of The Straits Times on December 07, 2018, with the headline 'Wobbling USA gymnastics files for bankruptcy'. Print Edition | Subscribe