Camp Mystic has filed for Chapter 11 bankruptcy relief, according to court records.
The case was filed in U.S. Bankruptcy Court in the Southern District of Texas on Wednesday by an attorney on behalf of Camp Mystic.
The move follows multiple lawsuits by families alleging that the camp failed to protect campers and counselors. Twenty-five campers, two counselors, and Dick Eastland, camp owner and executive director, died when the Guadalupe River flooded nearly a year ago.
The bankruptcy complicates the fate of these lawsuits and may delay resolution, experts said.
While the filing itself does not address the litigation, Chapter 11 bankruptcy generally triggers an automatic stay that can temporarily pause lawsuits while the bankruptcy case proceeds. A bankruptcy judge can modify or lift that stay under certain circumstances.
But Angela Littwin, a bankruptcy law professor at the University of Texas at Austin School of Law, said the more likely outcome is that the claims are ultimately resolved through the bankruptcy process itself.
"The most common outcome of a bankruptcy like this is that the lawsuits would not pick up, that they would be settled in the bankruptcy," Littwin said.
Littwin said the process involves creating a trust funded by insurance proceeds and company assets, with plaintiffs pursuing compensation through the trust rather than through individual lawsuits.
Carl Tobias, a law professor at the University of Richmond who has been following the wrongful death lawsuits from families, said the bankruptcy filing implies that the owners of Camp Mystic believe they don't have the resources to cover the outcome of the litigation.
"It's going to be more difficult for the families to recover compensation because of this," Tobias said.
Sam Taylor, an attorney representing six families who lost loved ones at the camp, said the filing could delay ongoing court proceedings by "weeks or months."
Kyle Findley, another attorney at a law firm representing families, called the bankruptcy filing a "financial reorganization that could allow the same people and entities to remain in control of Camp Mystic while attempting to circumvent the justice of the Court."
"Bankruptcy will not stop all responsible parties from being held accountable," said Paul Yetter, a third attorney representing families. "These innocent girls deserve justice."
Chapter 11 bankruptcy typically allows businesses to continue operating while they reorganize their finances under court supervision. According to court records, Camp Mystic's managers authorized the company to pursue either a reorganization plan or, if necessary, a liquidation of its assets.
According to Littwin, Camp Mystic's prospects for reorganization may be complicated by its uncertain future.
Camp Mystic decided to remain closed this summer following outcry from families and concerns over many Texas camps' emergency plans. Camp Mystic has also been under investigation by the Texas Legislature and state health officials over its role in the flooding deaths. An investigator said during a legislative hearing in April that Camp Mystic leaders had a "complacent" attitude toward flooding before the disaster, camp counselors lacked emergency training and the camp didn't have a written evacuation plan for flooding.
"If they're not in operation, they're probably not going to continue in operation," Littwin said. "It's going to be hard for them to establish summer camps again, with the state restrictions, difficulty getting insurance and possibly difficulty persuading families to send their kids there."
Court documents for Camp Mystic, LLC, and affiliated organizations show that their total debt exceeds $10 million. A filing for the LLC shows there are 1,000 to 5,000 estimated creditors and $1 million to $10 million in estimated assets. Documents for three other related entities show a wide range of assets, from $50,000 or less to up to $50 million.
More than 130 people died across the Hill Country during the natural disaster.
KUT News has reached out to Camp Mystic and its attorney listed on the case but has not heard back.
Neena Satija and Kailey Hunt contributed to this story.
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