USA Gymnastics gets confirmation of plan, $380 million settlement

By Sarah Lizee

Olympia, Wash., Dec. 13 – USA Gymnastics received confirmation from the U.S. Bankruptcy Court for the Southern District of Indiana of the Chapter 11 plan jointly proposed by the debtor and the survivors’ committee, according to a press release.

The third amended plan, which was filed Monday, provides for a settlement with sexual abuse survivors and enables the organization to emerge from bankruptcy by year-end, the debtor said.

Judge Robyn Moberly confirmed the plan that provides for significant non-monetary commitments from USA Gymnastics focused on athlete safety and wellness and a $380 million financial settlement.

The plan's provisions include commitments by USA Gymnastics to further strengthen safe sport policies, complaint adjudication and member club involvement; and having at least one survivor on the organization’s board of directors, safe sport committee, and athlete health and wellness council.

It also provides for a restorative justice process to facilitate historical accountability, reconciliation and continued cultural transformation in the gymnastics community, USA Gymnastics said.

“The plan of reorganization that we jointly filed reflects our own accountability to the past and our commitment to the future,” USA Gymnastics president and chief executive officer Li Li Leung said in the release.

“Individually and collectively, survivors have stepped forward with bravery to advocate for enduring change in this sport. We are committed to working with them, and with the entire gymnastics community, to ensure that we continue to prioritize the safety, health, and wellness of our athletes and community above all else.”

USA Gymnastics said survivors and other creditors voted overwhelmingly to approve the plan on Nov. 29.

With the plan now approved by the court, a trust for the survivors will be funded by insurers, the United States Olympic & Paralympic Committee (USOPC) and USA Gymnastics.

Compensation will be distributed to survivors in line with the allocation schedule developed and approved by the survivors' committee.

USA Gymnastics said it will formally exit bankruptcy in the coming weeks, after necessary administrative work and the entry of an order by the court closing the case.

In connection with the confirmation of the plan, the USOPC has resolved its section 8 complaint against USA Gymnastics, which will continue USOPC's recognition of USA Gymnastics as the national governing body of the sport.

According to the third amended plan, holders of administrative claims, priority tax claims and other priority claims will be paid in full.

For the PNC Bank claim, the Visa commercial card agreement dated May 7, 2010 between PNC Bank and the debtor will be reinstated and become the obligation of the reorganized debtor. PNC Bank will return all of its rights and collateral pledged under the agreement.

For the Sharp claim, the value lease agreement, equipment sales agreement and customer case maintenance agreement between Sharp Business Systems and the debtor ill be deemed assumed and will become the obligation of the reorganized debtor. Sharp will retain all of its rights and collateral under the agreements.

Holders of general unsecured convenience claims will receive either payment in full in cash, or other treatment leaving holders unimpaired.

Holders of general unsecured claims will receive payment of 80% of their claims, payable in installments on Aug. 15, 2022, Aug. 15, 2023, and Aug. 15, 2024. Holders may elect to have their claim reduced to $500, in which case their claim will be treated as a general unsecured convenience claim.

Holders of sexual abuse claims filed after the bar date may file a claim with the settlement trustee to be deemed a future claimant and may recover from the future claimant reserve, provided funds remain in the reserve, subject to certain conditions.

The Indianapolis-based gymnastics organization filed bankruptcy on Dec. 5, 2018 under Chapter 11 case number 18-09108.

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