USA Gymnastics’ Chapter 11 plan effective as of April 25

By Sarah Lizee

Olympia, Wash., April 25 – USA Gymnastics’ Chapter 11 plan went into effect on Monday, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of Indiana.

The third amended plan, which was filed jointly by the debtor and a survivors’ committee and confirmed on Dec. 16, provides for a settlement with sexual abuse survivors.

The organization said the plan 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 had said in a press 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.

Under the plan, a trust for the survivors was to be funded by insurers, the United States Olympic & Paralympic Committee (USOPC) and USA Gymnastics.

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

In connection with the confirmation of the plan, the USOPC 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.

Holders of administrative claims, priority tax claims and other priority claims were to be paid in full.

For the PNC Bank claim, the Visa commercial card agreement dated May 7, 2010 between PNC Bank and the debtor was to be reinstated and become the obligation of the reorganized debtor. PNC Bank was to 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 was to be deemed assumed and would become the obligation of the reorganized debtor. Sharp was to retain all of its rights and collateral under the agreements.

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

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

Holders of sexual abuse claims filed after the bar date could 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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