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USA Gymnastics’ $380 Million Bankruptcy Plan Gets Approval (1)

Dec. 13, 2021, 3:54 PMUpdated: Dec. 13, 2021, 9:36 PM

USA Gymnastics’ Chapter 11 plan to settle hundreds of sexual abuse claims by paying victims $380 million, largely from insurance proceeds, received bankruptcy court approval.

The plan, supported by all 476 abuse survivors who turned in a vote, allows the sport-governing organization to wrap up a bankruptcy filed following revelations that team doctor Larry Nassar sexually abused hundreds of female gymnasts over several years. Some of the organization’s biggest stars, like Simone Biles and Aly Raisman, joined with other gymnasts seeking compensation for the abuse they faced.

All USAG insurers, including National Casualty Co. and Virginia Surety Co., agreed to contribute to a bankruptcy plan trust for victims with legal claims against the organization. TIG Insurance Co. became the final insurer to settle with USAG and the abuse survivors, agreeing to a deal in the lead-up to Monday’s hearing in the U.S. Bankruptcy Court for the Southern District of Indiana.

The U.S. Olympic & Paralympic Committee is contributing $34 million directly as part of the settlement.

The plan “is certainly in the best interest of the creditors,” Judge Robyn L. Moberly said at the hearing before approving the plan.

“This historic settlement ends another chapter in the Larry Nassar scandal,” victims’ attorney John Manly of Manly, Stewart & Finaldi said in a statement Monday. “We prevailed for one simple reason, the courage and tenacity of the survivors. These brave women relived their abuse publicly, in countless media interviews, so that not one more child will be forced to suffer physical, emotional, or sexual abuse in pursuit of their dreams.”

“USA Gymnastics is deeply sorry for the trauma and pain that Survivors have endured as a result of this organization’s actions and inactions,” USAG President and CEO Li Li Leung said in a statement. “The Plan of Reorganization that we jointly filed reflects our own accountability to the past and our commitment to the future.”

USA Gymnastics filed for bankruptcy in December 2018 facing the fallout of Nassar’s abuse. The former team doctor is serving prison sentences for sexual assault and possession of child pornography.

The organization earlier this year reached a viable abuse settlement framework that relies on insurance provider payments. The Chapter 11 plan, cleared for a creditor vote in October, calls for distribution of funds to abused gymnasts and the maintenance of programs to report abuse and support athletes. USAG initially projected that the settlement fund would total about $425 million, but the figure was reduced following further negotiations with insurers.

“For years we have been demanding change from these organizations that failed us, and the institutional reforms that are part of this settlement will help ensure this abuse does not happen to young athletes in the future,” former Olympic gymnast Tasha Schwikert Moser said in a statement.

The case is In re USA Gymnastics, Bankr. S.D. Ind., No. 18-09108, hearing 12/13/21.

(Updated to indicate court approval of the plan and to include additional reporting throughout.)

To contact the reporter on this story: Alex Wolf in New York at awolf@bloomberglaw.com

To contact the editors responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Roger Yu at ryu@bloomberglaw.com

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