Wednesday, June 3, 2020

USA Gymnastics files for bankruptcy in aftermath of Nassar's abuse

December 6, 2018

USA Gymnastics filed for bankruptcy in the aftermath of ex-MSU and USA Gymnastics doctor Larry Nassar's sexual abuse. 

This would allow the organization to "expedite resolution of claims by the Nassar survivors" and allow for USA Gymnastics to work with the United States Olympic Committee to "determine the best path forward for the sport of gymnastics," a statement from the USA Gymnastics Board Chair Kathryn Carson said.

The organization has faced criticism for its handling of reports of Nassar’s sexual abuse. In October, former USA Gymnastics CEO Steve Penny was arrested for tampering with evidence. Kerry Perry, who replaced Penny after his resignation, faced criticism from survivors and resigned after holding the position for less than a year. Last month, the United States Olympic Committee moved to revoke USA Gymnastics’ status as the committee’s governing body for gymnastics.

The "necessary step" toward rebuilding the organization and meeting their responsibilities to athletes, survivors and the community was to voluntarily file for Chapter 11 bankruptcy, the statement said. Specifically, they filed a voluntary petition for protection under Chapter 11 of the Bankruptcy Code.

"Critical to this effort are reaching resolution with the survivors of Larry Nassar’s abuse and putting the safety and well-being of our athletes at the forefront of all that we do," the statement said.

USA Gymnastics will continue to operate fully and conduct day-to-day business, as filing for bankruptcy would just provide the organization with "the opportunity to reorganize." The statement also noted that a search for a new CEO is currently taking place.

"All of our actions – from this filing, to working for resolution with the survivors of Nassar’s horrific abuse, to the safety initiatives we have implemented, to supporting our members and clubs, to providing educational and competitive opportunities – are taken with recognition of the past and a goal to make USA Gymnastics the best it can be for all participants," the statement said. 

Nassar is serving a 60-year federal sentence on child pornography-related charges. Other individuals employed by USA Gymnastics have had legal action taken against them as well. 

Debra Van Horn, a former USA Gymnastics athletic trainer who worked with Nassar, was arrested in September on one charge of second-degree sexual assault. 

An attorney representing many of the women suing USA Gymnastics, John Manly, told ESPN that the organization's filing for bankruptcy was an "inevitable result of the inability of this organization to meet its core responsibility of protecting its athlete members from abuse."

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