(Photo: Pixaby)
A judge has approved USA Gymnastics’ use of two consultant groups to help the organization through its bankruptcy process. This comes after the Indiana Attorney General’s office filed limited objections to the ongoing services of the consultants.
Earlier this month, USA Gymnastics filed for Chapter 11 bankruptcy, citing some 100 lawsuits filed against the organization and its possible removal as the sport’s national governing body. USAG also contracted with Alfers GC Consulting and Scramble Systems to help it navigate its reorganization.
Indiana University Maurer School of Law professor Pamela Foohey says it’s pretty standard for companies to use consultants when going through bankruptcy.
“Yes, many companies that file for bankruptcy, particularly larger companies or ones with a more publicly facing front, hire consultants to help them through their bankruptcy case,” she says.
However, the relationship between the USAG and the consultants is different than with lawyers.
“Lawyers have a professional duty, a duty of responsibility to their client and that includes some level of discretion as to information they get from their client that they must keep private,” says Foohey. “Consultants do not have that level of professional duty to the companies they work for. They have different duties and it’s more of a management role than a lawyer-client relationship.”
Indiana Attorney General Curtis Hill – who faced sexual misconduct allegationsearlier this year – has confirmed his office is actively investigating USA Gymnastics and its ties to 100 sex assault claims filed against the organization and its representatives.
“The allegations against USA Gymnastics are extremely disturbing,” Hill said in a statement Wednesday, when his office submitted limited objections to USAG continuing to use the two consultants. “While my office typically refrains from commenting about ongoing investigations, we can confirm today that we have been investigating USA Gymnastics for nearly a year. Today we took an initial step toward strengthening protections for athletes participating in USA Gymnastics events and at member gyms around the country. We will continue working diligently to ensure non-profit entities in Indiana act with integrity."
In the limited objection to the consultants, Hills office says the consulting firms must agree to abide by the state’s child abuse reporting laws, cooperate with pending investigations, and work towards full implementation of the recommendations to USAG by attorney Deborah Daniels – who was hired by the organization in 2016 to conduct an independent review.
Foohey says the limited objection is standard to make sure all involved in the process follow the same rules.
“I think that Hill’s objection is simply to have the bankruptcy court make sure that the consultant is on notice about that on a record in a bankruptcy court,” she says.
And it also helps Hill’s office show they are actively aware of the situation.
“In terms of the AG's office, I think they’re doing their duty to show the public that they are taking care of sex abuse claimants and anyone else that might come forward,” says Foohey.
USA Gymnastics released a statement following a judge’s approval of the consultants insisting the organization has been fully compliant with the Attorney General’s investigation.
“USA Gymnastics has cooperated fully with the Indiana Attorney General’s investigation. At a hearing this morning, the court granted USA Gymnastics’ request to employ two operational consultants over the objections of the United States Trustee and the Indiana Attorney General. USA Gymnastics is committed to the safety and well-being of its athletes. All current employees, board members, and our membership are required to follow federal and state law, as well as all of the reporting and safe sport procedures we have implemented.”
USA Gymnastics is expected to have the next bankruptcy court hearing Jan. 16.
