USA Gymnastics is turning to bankruptcy in an effort to ensure its survival.
The embattled Indianapolis-based organization filed a Chapter 11 bankruptcy petition on Wednesday as it attempts to reach settlements in the dozens of sex-abuse lawsuits it faces and to forestall its potential demise at the hands of the U.S. Olympic Committee.
In bankruptcy papers, the organization said it had estimated liabilities between $50 million and $100 million and estimated assets in the same range. It estimated its number of creditors in the range of 1,000 to 5,000.
The largest unsecured creditor is former CEO Steve Penny, who is owned $340,000 in severance compensation, according to the filing. Penny resigned under pressure in March 2017. He was arrested in October on allegations of evidence tampering involving Nassar's case.
USA Gymnastics faces 100 lawsuits representing 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, last year pleaded guilty to sexually assaulting nine victims and possessing child pornography. He was sentenced to 55 years in federal prison followed by at least 40 years in state prison.
Kathryn Carson, who was recently elected chairwoman of the USA Gymnastics board of directors, said the organization is turning to bankruptcy to speed things up after mediation attempts failed to gain traction.
She says: "This is not a liquidation. This is a reorganization."
Carson said the legal maneuvering will delay USOC's efforts to strip its designation as a national governing body.
The USOC on Nov. 5 took steps to remove USAG as the sport's 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, 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," Carson said.
USOC spokesman Patrick Sandusky disagreed.
"While we fully understand that USAG believes this restructuring will begin to solve deficiencies we've identified, the filing does not impact our Section 8 complaint and that process will move forward," Sandusky said.