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USA Rugby has officially filed for Chapter 11 bankruptcy. It comes four months after the national governing body confirmed that its financial position was extremely poor, leading to the creation of an emergency ‘task force’ to facilitate the immediate restructuring of the crumbling organization.
Facing ‘insurmountable’ debts compounded by significant overspends on high performance in 2019, USA Rugby Congress on Sunday voted to proceed with the Chapter 11 filing. The decision will see significant budget and staffing cuts at USAR’s national office in Colorado though World Rugby will provide temporary funding to maintain national team programs.
Chapter 11 allows an organization to continue operation and retain assets in case of bankruptcy though it is subject to terms and conditions set by the federal court. It also offers protection against collection or litigation. By contrast, a Chapter 7 filing would dissolve the organization and see assets liquidated.
A full restructuring of USAR will now be undertaken with World Rugby and other creditors to review and approve over a 30-day period. It comes at a time when the sport is facing major challenges worldwide due to the COVID-19 pandemic. All rugby in the USA was suspended indefinitely on March 20.
The USAR statement in its entirety can be seen here.
