USA Gymnastics moves closer to settlement with Nassar abuse survivors

INDIANAPOLIS (CN) — USA Gymnastics cleared another hurdle in its bankruptcy plan that would pay $400 million to sexual abuse survivors of team doctor Larry Nassar and insurance companies.

U.S. Bankruptcy Judge Robyn Moberly approved the organization's disclosure statement on Monday in the third hearing this month on the matter, after all objections to the plan or the method of approval were either resolved or held to be brought forth at a later date.

“Based on the fact that there are no objections at this point to the disclosure statement or the proposed procedures for solicitation, we will approve both of them as motions,” said Moberly said.

The proposed plan is a joint effort between USA Gymnastics and a court-appointed committee that represents sexual abuse survivors and aims to settle current and future claims related to Nassar and others connected to the organization who abused young girls.

Under the plan, the over 500 abuse survivors would receive payments from the settlement fund, and a reserve fund would be created to set aside money for future claims that surface over the next five years.

The $400 million figure is far greater than the previously rejected offer of $215 million and less than the $500 million Nassar’s former employer, Michigan State University, agreed to pay survivors.

Besides monetary compensation, the proposed plan also offers a pathway for USA Gymnastics to make itself a safer organization going forward.

This includes a new "safe sport policy" to establish safety standards and accountability for its gymnastics clubs. The plan also calls for a streamlined process for athletes to report violations of the organization's policies, which includes an online portal where reports of misconduct can be filed.

Now that the disclosure statement has been approved, creditors of USA Gymnastics will begin voting on the plan, with ballots due by Nov. 29. A report on the vote would be issued on Dec. 2, with final confirmation hearings set for Dec. 13 and 14.

In order to keep the process moving in recent weeks, USA Gymnastics petitioned the court to remove one insurance company from the case, so that it and the National Casualty Company could enter into their own agreement. The side agreement would release the insurer from all liability related to USA Gymnastics and any personal injury claims in exchange for a $50,000 payment.

The trio of hearings held this month illuminated several details of the plan that were preventing the parties from moving forward.

An objection filed by several of the non-committee sexual abuse survivors in early October said that the plan at that time “cannot be approved in its current form" because it lacks clear protocols for how the money will be allocated to each survivor.

“Most critically, the disclosure statement omits the allocation protocol, which is the single most important facet of the plan for voting creditors The allocation protocol dictates how much each creditor will receive on account of his or her abuse claim, yet it is nowhere to be found in the plan or disclosure statement currently on file,” the objection states.

The survivors also argued at that time that the plan lacked specifics for future claimants by failing to estimate the number of future claims, some which are already on file with the court.

“In addition, the plan appears to contemplate two separate allocation protocols – one for present claimants, another for future claimants,” the filing states. “As both exhibits are currently blank, it is impossible to tell what differences the debtor envisions between the two allocation protocols. But the existence of separate allocation protocols certainly implies that there will not be identical allocation protocols.”

This objection was echoed by U.S. Trustee Nancy J. Gargula and prompted the need for extra hearings so USA Gymnastics had time to disclose its proposed method for distributing the funds to the abuse survivors.

The framework of the now-disclosed plan calls for the weighing of each survivor’s individual circumstances. The relevant factors include the survivor’s age at the time of the abuse and the details and long-term effects of the abuse.

Once each survivor’s circumstances are factored in, the proposed allocation protocol details a method for divvying up the settlement payments between the survivors based upon the relevant and weighed factors.

Now that the disclosure statement has been approved by the court, further objections to the plan could still be forthcoming. Attorney Laura DuVall, representing the U.S. trustee, told the court during Monday's hearing that any other objections from the Department of Justice would be brought forward prior to the confirmation hearing in December.

“We are pleased to see the allocation protocol was filed, which was one of our largest concerns,” DuVall said. “If we opt to file an objection it would be at the time of confirmation.”

Nassar, 58, is serving a 60-year federal sentence after pleading guilty to child pornography charges, which is in addition to a state sentence of up to 175 years for his guilty plea on several counts of sexual assault.

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