USA Gymnastics Bankrupt; Abuse Victims May Not Get Restitution


By Lynn Fugaro, Staff Writer

USA Gymnastics is in serious financial trouble and the solution the entity came up with to resolve their financial issues has a number of people scratching their heads.

Under threat of being decertified by the United States Olympic Committee, USA Gymnastics has filed bankruptcy after running short on funds as it pays out the restitution related to former physician Larry Nassar’s sexual abuse convictions. Nassar was sentenced to 60 years in federal prison on child pornography charges and another 40 to 125 years in prison for sexual abuse of multiple victims that went on for decades.

Nassar, 55, sentenced in January 2018, is in a federal prison in Florida and isn't eligible for release until 2069.

Bankrupt: Financially and Morally?

The organization says it will continue operating after filing Chapter 11 and settling Nassar’s victims’ claims, which, it says, are covered by insurance previously purchased by USA Gymnastics. The organization filed Chapter 11 status in the Southern District of Indiana on December 5 with estimated total assets and liabilities of $50 million to $100 million, according to court documents.

The filing showed that the organization currently has between 1,000 and 5,000 creditors, and one of those is well-known Olympic gold and silver medalist, Ally Raisman, who has been outspoken about the abuse she endured while Larry Nassar was her doctor. In its bankruptcy filing, USA Gymnastics estimated the potential cost of the Nassar-related lawsuits between $75 and $150 million, while the organization has assets of only $6.5 million in cash and investments; the insurance policy will likely not cover the monetary awards, according to a USAG official.

Contradictory Statements?

What has people scratching their heads is that the filing of Chapter 11 bankruptcy may halt the paying out of claims to Nassar’s victims, which does nothing to achieve what USA Gymnastics Chairwoman, Kathryn Carson said in a recent 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, seek to expedite resolution and help them move forward.”

However, a USA Gymnastics spokesperson said, “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.” At the time of this writing, an investigation into how filing Chapter 11 will affect the paying out of pending claims to Nassar’s victims is taking place. Also, U.S. Olympic Committee spokesman Patrick Sandusky stated the USOC is “reviewing the effects of the bankruptcy filing on the pending proceeding to revoke USA Gymnastics’ recognition.”

Other USAG Problems

In addition to the possibility of decertification by the USOC and the bankruptcy filing, USA Gymnastics has seen at least seven high-profile officials and an entire board of directors leave their jobs recently, even though some of those people didn’t even take their position at USAG until after the Nassar arrest. The organization has been plagued with problems; here are just a few:

  • In October, former CEO Steve Penny was arrested on suspicion of removing documents related to the Nassar case from a gymnastics training facility in Texas.
  • In September, CEO Kerry Perry resigned after nine months after it was alleged that Perry failed to take adequate action during the Nassar fallout and did nothing to help resolve any issues related to Nassar.
  • In October, former United States Representative, Mary Bono, resigned as interim president and CEO after less than a week on the job. During her first few days in office, she was involved in two controversies at USAG.
  • In November, USAG's longtime COO, Ron Galimore, resigned without explanation

Most people agree that the young athletes who endured Nassar’s abuse for years (and even decades) should be awarded the monetary compensation they were promised months ago. While it’s unclear how filing Chapter 11 bankruptcy helps serve that purpose, USAG officials insist the filing will “...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."

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