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USA Gymnastics files for bankruptcy

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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.”

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USOC fires official as Larry Nassar report released

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The U.S. Olympic Committee fired chief of sport performance Alan Ashley in the wake of an independent report released Monday that said neither he nor former CEO Scott Blackmun elevated concerns about the Larry Nassar sexual abuse allegations when they were first reported to them.

The 233-page independent report detailed an overall lack of response when the USOC leaders first heard about the Nassar allegations from the then-president of USA Gymnastics, Steve Penny.

Blackmun resigned in February because of health concerns.

The report says the USOC took no action between first hearing of the allegations in July 2015 and September 2016, when the Indianapolis Star published an account of Nassar’s sex abuse. The report concludes that lack of action allowed Nassar to abuse dozens more girls over the 14 months of silence.

Nassar is serving decades in prison on charges of child pornography and for molesting young women and girls under the guise of medical treatment; many of his accusers testified in heart-wrenching detail at his sentencing hearing.

Though Ashley was the only one to get fired in the immediate aftermath of its release, the report paints a harsh picture of leadership of the entire U.S. Olympic movement, from the offices of the USOC to what it portrays as an essentially rogue, unchecked operation at the Karolyi Ranch in Texas — the training center run by Bela and Martha Karolyi where some of the abuse occurred.

The report concludes that one of Penny’s key objectives was to keep the allegations under wraps, to avoid “sending shockwaves through the community,” as he said in a conversation with an FBI agent.

Meanwhile, Penny is portrayed as repeatedly trying to get the FBI to investigate Nassar, but the report concludes “the investigation appears to have languished … for over seven months” in the FBI’s Detroit office. USAG took the allegations to the FBI’s Los Angeles office, but not until the newspaper report came out did that office take action.

The report says Penny notified Blackmun and Ashley that Nassar had retired in September 2015, but that both leaders had deleted the email, which referenced Nassar by name.

The report details the USOC’s relationships with the sports organizations it oversees as too deferential and not involved enough in policymaking to ensure athlete safety.

“In this governance model, the USOC exerted its broad statutory authority and monetary influence over individual sports primarily for the purpose of encouraging success at the Olympic Games, effectively outsourcing any decisions regarding on-the-ground child-protective practices to the NGBs,” the report states.

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U.S. figure skating rankings going into national championships

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A discipline-by-discipline look at U.S. figure skaters’ best season scores with no more top-level events until the U.S. Championships from Jan. 24-27 in Detroit …

Men
1. Nathan Chen — 282.42
2. Chen — 280.57
3. Chen — 271.58
4. Jason Brown — 263.42
5. Brown — 256.33
6. Brown — 234.97
7. Vincent Zhou — 234.25
8. Brown — 233.23
9. Zhou — 225.75
10. Camden Pulkinen — 223.95

Chen is on his way to a third straight national title, while Brown has been a pleasant surprise this fall after changing coaches in the offseason. The Sochi Olympian and 2015 U.S. champion even beat Chen in one program on the Grand Prix Series. Zhou, after placing sixth in PyeongChang, has struggled with under-rotations on jumps but is still in the driver’s seat for one of three world championships spots.

Women
1. Bradie Tennell — 206.41
2. Tennell — 202.41
3. Ting Cui — 199.79
4. Mariah Bell — 198.96
5. Tennell — 197.78
6. Bell — 196.60
7. Tennell — 192.89
8. Bell — 190.25
9. Bell — 188.97
10. Ashley Lin — 181.21

Two world team spots for the women. Tennell and Bell are the top returning veterans this season, but remember that 2017 U.S. champion Karen Chen has yet to compete with a foot injury. Then there are Ting, 16, and Alysa Liu, a 13-year-old who isn’t age eligible for junior or senior worlds but can compete in the senior division at nationals. Liu landed triple Axels in both programs at sectionals last month, scoring 212.97 points (though domestic scores are often inflated and not comparable with international scores).

Ice Dance
1. Madison Hubbell/Zachary Donohue — 205. 35
2. Hubbell/Donohue — 200.82
3. Hubbell/Donohue — 200.76
4. Hubbell/Donohue — 197.42
5. Kaitlin Hawayek/Jean-Luc Baker — 184.63
6. Hawayek/Baker — 184.04
7. Hawayek/Baker — 181.47
8. Rachel Parsons/Michael Parsons — 180.95
9. Lorraine McNamara/Quinn Carpenter — 180.57
10. Christina Carreira/Anthony Ponomarenko — 180.22

The only active U.S. couple to beat Hubbell and Donohue in direct competition is Madison Chock and Evan Bates, but the two-time world medalists missed the entire fall season due to Chock’s ankle surgery. With Olympic bronze medalists Maia Shibutani and Alex Shibutani sitting out this season and maybe done competing altogether, Hubbell and Donohue will be clear favorites to repeat as national champions.

Three U.S. couples will go to worlds. Hawayek and Baker, after qualifying for their first Grand Prix Final, are primed to go back after placing 10th last season. The status of Chock and Bates will largely determine who rounds out the world team.

Pairs
1. Tarah Kayne/Danny O’Shea — 191.43

2. Alexa Scimeca Knierim/Chris Knierim — 190.49
3. Knierim/Knierim — 182.84
4. Ashley Cain/Timothy LeDuc — 181.56
5. Kayne/O’Shea — 177.69
6. Knierim/Knierim — 177.22
7. Deanna Stellato/Nathan Bartholomay — 176.44
8. Cain/LeDuc — 175.06
9. Stellato/Bartholomay — 174.91
10. Stellato/Bartholomay — 174.78

Kayne and O’Shea, who likely would have made the Olympic team if the U.S. qualified more than one pair for PyeongChang, surprised by posting that 191 at the last event of the Grand Prix Series three weeks ago. The U.S. has just one pair at worlds this season for the first time since 1984 and last earned a medal in 2002. Kayne and O’Shea and the Knierims are ranked Nos. 9 and 10 in the world this season. Cain is recovering after falling head-first on the ice from a botched lift on Friday night.

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