USA Gymnastics Emerges from Bankruptcy with $380 Million Settlement for 500+ Nassar Survivors

On December 13, 2021, U.S. Bankruptcy Judge Robyn Moberly confirmed a joint Plan of Reorganization providing a $380 million settlement for sexual abuse survivors and enabling USA Gymnastics to emerge from bankruptcy after three years of proceedings. Over 90% of the more than 500 victims voted in favor of the settlement, which included $34 million from the U.S. Olympic & Paralympic Committee (USOPC) and $73 million from insurers. The settlement marked the culmination of USA Gymnastics’ December 5, 2018 bankruptcy filing—a strategic legal maneuver that limited liability while the organization faced hundreds of lawsuits from survivors of Larry Nassar and other coaches affiliated with USA Gymnastics.

The $380 million settlement combined with Michigan State University’s earlier $500 million settlement meant that survivors received a total of $880 million in compensation for institutional failures that enabled decades of systematic sexual abuse. However, the settlement’s non-monetary provisions revealed the persistence of institutional resistance to meaningful accountability. USA Gymnastics committed to strengthening SafeSport policies, improving complaint adjudication processes, and having at least one survivor on the Board of Directors, Safe Sport Committee, and Athlete Health and Wellness Council—requirements that should have been standard practice decades earlier but were only mandated after catastrophic institutional failure.

The bankruptcy proceedings exposed how USA Gymnastics had systematically prioritized legal fees over athlete safety even during the crisis. Between filing for bankruptcy in December 2018 and February 2020, USA Gymnastics accumulated $11.5 million more in legal fees than it spent on its Safe Sport program ($1.84 million total). In February 2020 alone, USA Gymnastics spent just $900 on SafeSport while running up millions in legal fees—demonstrating that institutional priorities remained focused on protecting organizational interests rather than athlete welfare even after the Nassar scandal forced public accountability.

The settlement included a Restorative Justice process to facilitate historical accountability, reconciliation, and continued cultural transformation in the gymnastics community. However, survivors and their attorneys expressed skepticism that organizational culture could meaningfully change when the institution’s response to catastrophic abuse involved strategic bankruptcy to limit liability rather than comprehensive institutional transformation. Attorney John Manly noted that meaningful changes occurred only ‘because Simone insisted on it,’ including the closure of the Karolyi Ranch training facility—changes USA Gymnastics did not make voluntarily but only under pressure from survivors with sufficient public platform to demand accountability.

The USOPC’s $34 million contribution represented a fraction of the organization’s culpability in enabling Nassar’s abuse. In July 2015, USA Gymnastics President Steve Penny had directly notified USOC CEO Scott Blackmun and Chief of Sport Performance Alan Ashley that National Team members had lodged sexual abuse allegations against Nassar, yet neither shared the information with others in the organization and the USOC took no action until the Indianapolis Star published its investigation in September 2016. This 14-month institutional silence enabled approximately 70 additional sexual assaults—abuse that could have been prevented if the USOC had fulfilled basic child protection obligations.

The bankruptcy settlement demonstrated how powerful sports organizations use legal mechanisms to limit accountability while maintaining institutional control. USA Gymnastics emerged from bankruptcy with its organizational structure largely intact, having successfully used the bankruptcy process to cap financial liability and avoid deeper institutional transformation. Survivor Sarah Klein told ABC News: ‘No athlete that I know has anything but disdain for USAG and USOPC. How could you believe in organizations who have the blood of little girls on their hands?’ The settlement provided monetary compensation but failed to address the fundamental institutional cultures that prioritized medals, reputation, and legal liability over the safety and welfare of young athletes.