USA Rugby has decided to file for Chapter 11 bankruptcy because its financial woes have been exacerbated by the coronavirus shutdown.
In financial strife since 2018, USA Rugby''s recent attempt to restructure was set back this month when it had to suspend all activities indefinitely in the face of the pandemic.
The loss of spring and summer membership dues, and sponsorship pullback, has “resulted in significant loss of revenue,” and the sport''s national board and congress agreed on Sunday that filing for Chapter 11 combined with more approved loans from World Rugby were "the best platform to swiftly and efficiently address challenges and deliver a foundation for future stability."
"The current suspension of sanctioned rugby activities caused by the ongoing COVID-19 pandemic has accelerated the existing financial challenges facing the union, and a reorganization process will now be progressed with input from World Rugby," USA Rugby said in a statement on Monday.
The measure will protect and support the men''s and women''s national sevens and 15s programs, the body said. Colorado-based USA Rugby posted a loss of more than $4 million in 2018 after making huge losses on the poorly attended Wales-South Africa test in Washington, and then the Rugby World Cup Sevens in San Francisco.
There was more issues last year when more than $1 million was drawn away by legal fees, and preparing the men''s 15s squad for the Rugby World Cup in Japan caused overspending by $825,000.
Late last year, USA Rugby began shrinking its office, reducing costs, and decentralizing to give stakeholders more independence from the national body.
For now, the coronavirus has stymied those plans.
“Given the ongoing financial challenges following a 2019 budgetary overspend, the unplanned loss of income advanced an insurmountable cashflow deficit and immediate action needed to be taken in order to sustain operations within USA Rugby and the rugby community," the body said.
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