USA Gymnastics
Getty Images

USA Gymnastics files for bankruptcy

2 Comments

USA Gymnastics is turning to bankruptcy in an attempt to ensure its survival.

The embattled organization filed a Chapter 11 bankruptcy petition on Wednesday in an effort to reach settlements in the dozens of sex-abuse lawsuits it faces and to avoid its potential demise at the hands of the U.S. Olympic Committee.

USA Gymnastics filed the petition in Indianapolis, where it is based. It faces 100 lawsuits representing over 350 athletes in various courts across the country who blame the group for failing to supervise Larry Nassar, a team doctor accused of molesting them. Nassar, 55, worked at USA Gymnastics and Michigan State University for decades. He is serving effective life sentences for child porn possession and molesting young women and girls under the guise of medical treatment.

Kathryn Carson, the recently elected chairwoman of USA Gymnastics’ board of directors, said the organization’s goal is to speed things up after mediation attempts failed to gain traction.

“Those discussions were not moving at any pace,” Carson said. “We as a board felt this was a critical imperative and decided to take this action.”

The filing does not affect the amount of money available to victims, which would come from previously purchased insurance coverage, she said. Carson said the insurance companies “are aware we’re taking this action and our expectation is they will come to the table and pay on our coverage.”

Carson added: “This is not a liquidation. This is a reorganization.”

John Manly, an attorney representing dozens of women who have pending lawsuits against USA Gymnastics, chastised the organization for continuing to “inflict unimaginable pain on survivors” and encouraged law enforcement officials to “redouble” their investigative efforts.

“Today’s bankruptcy filing by USA Gymnastics was the inevitable result of the inability of this organization to meet its core responsibility of protecting its athlete members from abuse,” Manly said in a statement. “The leadership of USA Gymnastics has proven itself to be both morally and financially bankrupt.”

USA Gymnastics insists that’s not the case, stressing that the filing is based on legal expediency, not fiscal distress.

While Carson acknowledged that sponsorship is down since the first women came forward against Nassar in the fall of 2016, she described the financial condition of USA Gymnastics as “stable.”

USA Gymnastics reported assets in a range of $50 million to $100 million and a similar range of liabilities, with 1,000 to 5,000 creditors. The organization said its largest unsecured creditor is former president and CEO Steve Penny, who is owed $339,999.96. USA Gymnastics is disputing Penny’s claim, though attorney Cathy Steege declined to get into the specific nature of the dispute.

Penny resigned under pressure from the USOC in March 2017. Two other presidents — Kerry Perry and former U.S. Rep. Mary Bono — have followed in what has become a revolving door amid the organization’s hierarchy.

It’s that chaos at the top that led the USOC to initiate the process of removing USA Gymnastics as the sport’s national governing body at the Olympic level — a step that’s taken only under the most extreme circumstances.

In an open letter to the gymnastics community in November, USOC CEO Sarah Hirshland said “you deserve better,” and that the challenges facing USA Gymnastics were more than it was capable of overcoming as currently constructed.

Carson said the legal maneuvering Wednesday delays the USOC’s efforts to strip its designation as a national governing body.

“We always have a dialogue going with them and intend to make it clear with them we have a lot to talk about and we want to keep that going,” she said.

USOC spokesman Patrick Sandusky said the committee is reviewing the filing’s potential effect on decertification. “Financial stability and viability are essential for a national governing body to operate in the best interests of the athletes,” Sandusky said.

USA Gymnastics believes bankruptcy protects it from having opportunities or assets taken away by a debtor. Carson acknowledged that being a national governing body “is a big part of how we raise our revenue.”

Carson, who replaced Karen Golz as chairwoman last week, said she accepted the position because she believes in the direction of USA Gymnastics, which she said doesn’t need money but rather time.

“We think we’re changing the dynamic and we certainly believe that we will try to remain the NGB,” Carson said. “To be clear, it is our lawyers’ firm belief that the bankruptcy will automatically stay (decertification) … and we will work with the USOC to regain credibility.”

Nicholas Georgakopoulos, a bankruptcy expert and law professor at the Indiana University’s Indianapolis campus, said USA Gymnastics is “hoping for a miracle” with its legal maneuvering.

“The USOC says you violated this relationship, here are the consequences and USA Gymnastics is saying it filed for bankruptcy, there are no consequences,” Georgakopoulos said. “This is like a gambling addict who goes to the casino and gambles every day and one day the casino says you can’t come anymore, you’ve lost too much, and addict says, I filed for bankruptcy, you can’t stop me from coming to the casino.”

If the USOC wants to go forward with decertification, it must now go to court.

USA Gymnastics has no timetable on how long the bankruptcy process will take and did not offer a ballpark on how much it expects to pay in settlements. Its doors, however, remain open for business.

“We are continuing to pursue all aspects of our current operating model,” Carson said. “This affords us an opportunity to reorganize as well as resolve the claims with the survivors.”

OlympicTalk is on Apple News. Favorite us!

MORE: Olympic medalist no longer on USA Gymnastics suspended list

Leanne Smith leads U.S. gold medalists at para swim worlds

Getty Images
Leave a comment

Leanne Smith has never competed at a Paralympics. Came into this week’s world championships with zero world medals. But she leaves London with three individual golds, most for any American, one year before the Tokyo Games.

Smith, 21, won the 150m individual medley, 50m breaststroke and 100m freestyle in her classification, all in American record times. The last two titles came on the final day of the seven-day meet on Sunday.

Smith, diagnosed with a rare neurological muscle disease called dystonia in January 2012, began swimming in 2013. By 2017, she broke a world record and then debuted at the world championships with a best individual finish of sixth.

The U.S. finished with 35 total medals and 14 golds, ranking sixth in the overall standings. Ukraine, usually strong at the Paralympics, led the way with 55 medals. Full results are here.

Jessica Long, the second-most-decorated U.S. Paralympian in history with 23 medals, earned six this week — five silvers and a bronze — to give her 52 career world championships medals.

Two-time Paralympian Mallory Weggemann earned two golds this week, giving her 15 world titles in three appearances (her others being in 2009 and 2010).

She won 50m titles in the butterfly and freestyle. Weggemann won a 2012 Paralympic 50m free title but was fortunate just to make it back for Rio after a 2014 accident that she said was harder to come back from than her teenage paralysis. She left Rio with no medals but a resolve to return for a third Games in Tokyo.

“I’m two seconds away from bursting into tears,” Weggemann said after winning the first of her two golds in the 50m fly, according to U.S. Paralympics. “I had a really rough go these past three years since Rio, so to finally be back after busting my butt to be here, and to be here in London of all places, is absolutely incredible.”

Fellow Rio Paralympians McKenzie Coan and Robert Griswold added two golds a piece.

OlympicTalk is on Apple News. Favorite us!

MORE: Five storylines to watch for Tokyo Paralympics

Heimana Reynolds wins skateboard world title, nears an Olympic goal from age 10

Getty Images
Leave a comment

In February 2009, a 10-year-old Heimana Reynolds was profiled by his local NBC TV station on Oahu.

“My goal is to become a professional skateboarder and compete in the X Games and the Olympics,” he said, according to the report.

Skateboarding would not be added to the Olympics for another seven years. But here Reynolds is, age 21, having just won the world title in park, one of two skateboarding events that debut at the Games in Tokyo.

Reynolds, who wasn’t named to the four-man U.S. national team in March, consolidated his lead in the Olympic qualification rankings by prevailing over a pair of Brazilians in Sao Paulo on Sunday.

A shirtless Reynolds scored 88 points in the final, beating Luis Francisco (85.50) and Pedro Quintas (85).

No more than three Americans can make the Olympic team in the event, which will make it difficult if three-time Olympic halfpipe snowboarding champion Shaun White decides to continue his skateboarding pursuit. White was the sixth-best American, bowing out in the semifinals in 13th place on Saturday in just his second contest since returning to competitive skating last year.

Back to Reynolds. He grew up on the North Shore and attended the Punahou School, where Barack Obama is the most famous alum. His first name is Tahitian, reportedly referring to the power of Jesus’ crown of thorns.

Reynolds, the son of a surfer, proved a natural on land. After pre-teen media profiles, he blossomed into a world silver medalist last year. He won an Olympic qualifier in China in July to take the top spot in the Olympic rankings despite a best career X Games finish of sixth.

OlympicTalk is on Apple News. Favorite us!

MORE: Chloe Kim details tough Princeton transition