Cheer Athletics-Plano, the flagship branch for one of the nation’s largest and most successful all-star cheerleading organizations, has filed for bankruptcy protection just one day before a sex abuse lawsuit against it was scheduled to go to trial in Texas state court.

The Plano-based gym filed for Chapter 11 on Sunday, listing estimated assets at less than $50,000 and liabilities between $1 million and $10 million. The filing comes as Cheer Athletics faces multiple lawsuits, including a 2021 case brought by twin sisters Hannah and Jessica Gerlacher, who allege they were repeatedly sexually assaulted by former Cheer Athletics coach Jason “Jay” McCartney when they were minors.

The sisters’ suit names McCartney, three other Cheer Athletics entities and the U.S. All Star Federation (USASF), accusing the latter of failing to take appropriate action after being informed of McCartney’s alleged abuse.

(McCartney has denied wrongdoing. He is currently listed as temporarily ineligible on USASF’s restricted and ineligible list.)

The plaintiffs, who have publicly spoken about their allegations, are seeking more than $10 million in damages. Their case, which was set to go to trial Monday morning in Austin, Texas, has been put on hold as a result of the bankruptcy. On Oct. 17, the court denied the defendants’ motion for summary judgment, prompting a flurry of pre-trial motions by Cheer Athletics and the USASF in the last few weeks. 

Michelle Simpson Tuegel, the sisters’ attorney, criticized the timing of the bankruptcy filing and argued it reflected Cheer Athletics’ lack of confidence in its defense.

“I think it is pretty obvious what they were trying to avoid and what they were afraid of,” Simpson Tuegel told Sportico in a phone interview. “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 dozens of former youth cheerleaders who in recent years have filed lawsuits alleging sexual misconduct by coaches and negligence by the organizations that employ or oversee them, including governing bodies like the USASF and USA Cheer, as well as the sport’s corporate giant, Varsity Brands.

Simpson Tuegel has represented three other plaintiffs in suits against McCartney and Cheer Athletics, including two Jane Does who settled their claims in 2023 but were prepared to appear as plaintiffs’ witnesses in the Gerlachers’ trial.

“We made the strategic decision to do this for the purpose of reorganization after nearly five years of significant legal expenses,” Cheer Athletics’ owners said in a written statement provided to Sportico from an outside PR firm. “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, Cheer Athletics also faces a federal lawsuit filed by Alicia Mims, the mother of a deaf cheerleader, who has accused Cheer Athletics of discriminating against her daughter by failing to properly accommodate her disability. A bench trial in that case—which includes a crossclaim filed against the Mims for breach of contract—was scheduled for Nov. 17. Because the lawsuit is in federal court, Mims can seek permission to continue her lawsuit or transfer it to the bankruptcy proceedings.

“There’s a clear pattern here: avoid accountability at all costs,” Mims’ attorney, Andrew Rozynski, said in an emailed statement. “We believe this isn’t a struggling business trying to reorganize. This is a litigation strategy. This won’t stop us. We’re 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 Plano in 1994 by two prominent cheerleading coaches, Angela Rogers and Joseph “Jody” Melton, and later joined by Brad Habermel as a co-owner. The brand has since expanded to 20 franchises nationwide, most recently adding a Maine location earlier this year. Along the way, Cheer Athletics’ all-star teams have come to dominate the annual Cheerleading Worlds competition held at Walt Disney World in Orlando and co-hosted by the USASF.  In 2020, a squad from Cheer Athletics-Plano competed in Season 15 of America’s Got Talent. 

This summer, Rogers, Melton and Habermel were named managers of the Dallas Drive team set to compete next year in Varsity’s Pro Cheer League.

Cheer Athletics-Plano operates as a Texas LLC, with Rogers, Habermel and Melton listed as its managing members. The trio are also owners of Cheer Athletics-Frisco, Cheer Athletics-Austin (now inactive), Cheer Athletics Brands and Cheer Athletics Holdings. 

As with any bankruptcy matter, one key consideration is whether creditors can claim that the named debtor has a significantly close relationship with other entities to justify piercing the corporate veil.

“It will be interesting what is unraveled as far as when and how and what they were moving around with these other entities,” said Simpson Tuegel. “Frankly, they have tried to hide the ball as to their entity structure. … I can’t say for sure yet if that’s the case here, but I sure suspect that.”

As of Monday, only one creditor, the Plano Independent School District, had filed a claim ($4,185.21) against the debtor related to past property taxes owed. The bankruptcy court overseeing Cheer Athletics’ Chapter 11 case has scheduled a meeting of creditors for Dec. 10, with proof of creditors’ claims due by March 2.