Chapter 7 Bankruptcy Filing Official for Embattled Club

According to a CNN article, the Valley Swim Club in Pennsylvania filed for Chapter 7 bankruptcy. The swim club recently underwent allegations that it discriminated against minority children.

The children were a part of the Creative Steps Day Care, which had a contract with the club. The swim club allegedly canceled the contract after the first visit.

This action led to complaints, allegations of racism and lawsuits. The controversy made national headlines, and legal bills were one of the factors contributing to the club’s financial hardship.

At the time of the incident, club president John Duesler said in a statement that the contracts were canceled because they day care’s children had changed the “atmosphere and complexion” of the club.

Duesler later stated “he made a poor choice of words” and denied that discrimination played a role in canceling the contracts.

He later apologized, explaining the reason the contracts were canceled was because the club “severely underestimated the number of children and our capacity to handle these groups. It was a safety issue and that was the only reason that we felt it was not safe for them to be there.”

After the incident, the swim club filed for Chapter 7 bankruptcy according to Michael Cibik, the bankruptcy attorney representing the swim club.

Cibik said the club has been struggling for 10 years and has not been making a profit. He also stated the discrimination allegations may have been a contributing factor for filing for Chapter 7 bankruptcy.

According to the Philadelphia Inquirer the swim club will start selling its assets to pay off their creditors during the bankruptcy protection. Their assets are allegedly worth around $1 to $10 million. The bankruptcy petition lists its debt at $100,000 to $500,000.

The bankruptcy filing might affect the potential settlements from the alleged incident as both the Creative Steps Daycare and parents of the children have filed complaints against the company.

The complaints were filed with state agency the Human Relations Commissions. The state agency did find that the club engaged in racial discrimination and proposed the club to pay a fine of $50,000 for one child’s complaint.

The federal class action lawsuit has been placed on hold due to the bankruptcy filing, but they do face more potential lawsuits and more fines.