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Cheer Athletics Plano, a high profile all star cheerleading gym in Texas, has filed for Chapter 11 bankruptcy protection just one day before a lawsuit alleging repeated childhood sexual assault by a former coach was set to begin trial in state court, Sportico reported, via Yahoo! News yesterday.
The Plano-based gym reported estimated assets below $50,000 and liabilities between $1 million and $10 million. The bankruptcy halts a case brought in 2021 by sisters Hannah and Jessica Gerlacher who allege that former Cheer Athletics coach Jason “Jay” McCartney sexually assaulted them multiple times when they were minors.
Their lawsuit names McCartney, additional Cheer Athletics entities, and the U.S. All Star Federation. The claim asserts that the governing body failed to take action after being notified about McCartney’s alleged misconduct. McCartney has denied wrongdoing and appears on the USASF restricted and ineligible list.
The sisters are seeking more than $10 million in damages. The trial was scheduled to begin Monday morning in Austin but has now been paused due to the bankruptcy filing. On October 17 the court denied a motion for summary judgment filed by the defendants which was followed by a series of last minute legal efforts from Cheer Athletics and the USASF.
A plaintiff’s attorney representing the Gerlachers criticized the sudden filing saying “I think it is pretty obvious what they were trying to avoid and what they were afraid of. We were literally at the last hour before a jury trial where Hannah and Jessica were going to see justice in court.”
The Gerlachers are among many former youth cheerleaders across the country who have filed lawsuits alleging sexual misconduct by coaches and negligence by organizations overseeing the sport including gyms, national governing bodies, and Varsity Brands which dominates the cheer industry.
Cheer Athletics has faced other lawsuits including claims by two Jane Does who reached confidential settlements in 2023 but were prepared to testify in support of the Gerlachers.
In a statement provided through a public relations firm, gym owners said the decision was designed to allow the business to continue operating. “We made the strategic decision to do this for the purpose of reorganization after nearly five years of significant legal expenses. While we remain confident in our legal position this incredibly difficult decision will allow us to strengthen our foundation and continue serving our athletes now and for many years to come.”
Beyond the Gerlachers’ case the company is also a defendant in a federal lawsuit brought by the mother of a deaf cheerleader who alleges disability discrimination. Because that case is in federal court the plaintiff may request permission to continue her suit or proceed through the bankruptcy process. Her attorney said in a statement,“There is a clear pattern here: avoid accountability at all costs. We believe this is not a struggling business trying to reorganize. This is a litigation strategy. This will not stop us. We are challenging this filing and fighting to make sure the Mims family who have already been through so much get their day in court.”
Cheer Athletics was founded in 1994 in Plano and has grown into a national brand with 20 locations. Teams representing the gym have won major national and international championships including the Cheerleading Worlds event and the organization has had appearances on national television.
Cheer Athletics Plano is operated by three managing members who also have ownership stakes in other related Cheer Athletics entities. With multiple companies involved one key question in the bankruptcy will be how closely these entities are intertwined and whether creditors can argue that assets should be shared among them. A plaintiff’s attorney representing the Gerlachers said, “It will be interesting what is unraveled as far as when and how and what they were moving around with these other entities. Frankly they have tried to hide the ball as to their entity structure. I cannot say for sure yet if that is the case here but I sure suspect that.”
As of Monday only one creditor had filed a claim. The bankruptcy court has set a meeting of creditors for December 10 and proof of claims is due by March 2.
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