USA Rugby crafted an FAQ regarding its Chapter 11 bankruptcy.
What does Chapter 11 bankruptcy mean for USA Rugby?
A: Chapter 11 bankruptcy means USA Rugby has filed with the United States Bankruptcy Court to supervise its reorganization. This means USA Rugby is condensed to basic operation over the next 30 to 60 days and possibly longer in order to restructure and reemerge a healthier organization, both fiscally and structurally. Under the supervision of the court, the USA Rugby Board, Governance Restructuring Group and Congress will work on a new operational and financial structure with plans on addressing from current debt. That new structure will be presented and then approved or denied by the Court and USA Rugby creditors.
Why Chapter 11?
A: The USA Rugby Board consulted with legal advisors about the current deficit and impact of suspended income. It was recommended that filing Chapter 11 bankruptcy puts USA Rugby and the game as whole in best position to continue towards the reorganization and stability, despite the financial shortfall. The plan for Chapter 11 was then presented to USA Rugby Congress where a vote was passed in favor. The alternative was a Chapter 7 bankruptcy, which would have effectively closed the doors on USA Rugby.
Did COVID-19 cause the bankruptcy?
A: As has been communicated, USA Rugby has been in a financial deficit following a budgetary overspend in 2019. Plans were in place to overcome that initial deficit, however with the unexpected freeze in revenue from member dues, sponsorship and events caused by COVID-19, as well as an arbitration filing related to past litigation; USA Rugby’s financial strains became insurmountable and bankruptcy had to be explored.
What does this mean for the governance reorganization?
A: Following the Chapter 11 filing, a Governance Restructuring Group will pick up with Task Force in managing the reorganization on an accelerated timeframe. This group will continue with the project and present a final structure after 30 days. Many of those who worked with the Task Force effort will continue so that progress is not lost by this new change.
Is USA Rugby still operating, can I still contact them?
A: Yes, the USA Rugby National Office is still open, however with a significantly condensed staff and resources. Please contact the office with needs and questions via email (membership@usa.rugby).
What does this mean for me and my club?
A: Currently, the immediate instruction is to remain off the rugby pitch and not host team activities of any sort. This is the responsible action and remains instruction of federal health officials during COVID-19. USA Rugby will soon communicate what impacts there will be to guidelines, services and coverage for all members before the suspension is lifted.
Should I still register with USA Rugby for the summer or fall if the suspension is lifted?
A: Each member should still register for benefits and coverage when the time comes. Member registration is a major piece of the reorganization effort and proper direction will be officially communicated before play resumes. Please look for further communications from the National Office on membership moving forward.
Will me and my club be insured when the suspension is lifted and rugby returns?
A: One of the first items to be addressed in the bankruptcy proceeding is the maintenance of insurance, which is our goal. Only upon either the bankruptcy court refusing to allow insurance premiums to be paid, or if USA Rugby is not able to successfully emerge from the Chapter 11, would the insurance policy end. This determination remains priority and will be made prior to the lifted suspension where all community entities needing insurance will be in close contact and informed through the Governance Reorganization Group. At this stage, the support and resolve of all rugby stakeholders will be a huge encouragement in ensuring coverage remains through the end of this membership cycle and is available to members post-COVID-19.
What does this mean for the National Teams and their competitions?
A: The Men’s and Women’s National Teams (XVs and 7s) are protected through the bankruptcy. All athletes will continue to self-train through the COVID-19 pandemic and return to rescheduled competitions once health officials deem sporting events safe again. World Rugby and The USOPC remain in close contact.
Will this affect the MLR or WPL?
A: The Chapter 11 filing will not have immediate effect on Major League Rugby or the Women’s Premier League.