Camp Mystic files for bankruptcy, pausing Texas flood lawsuits

The company operating Camp Mystic, the storied Hill Country girls camp where 25 campers and two counselors died in catastrophic Fourth of July flooding, is seeking bankruptcy protection.

It filed for Chapter 11 reorganization at 1 a.m. Wednesday, but said it could later decide to liquidate.

The move comes nearly a year after flash flooding along the Guadalupe River swept through the camp near Hunt in one of the deadliest flood events in Texas history and two months after the camp retreated from efforts to reopen this summer.

The filing pauses lawsuits filed by families of victims who allege Camp Mystic failed to adequately prepare for or respond to the flooding.

FROM NOVEMBER: Families of flooding victims sue Camp Mystic, owners for wrongful deaths of 13 campers, 2 counselors

Paul Yetter, a Houston attorney representing seven families suing the camp over their daughters’ deaths, said the court fight will continue.

“Bankruptcy will not stop all responsible parties from being held accountable,” he said. “These innocent girls deserve justice.”

Mark Lanier, who is representing six families who lost daughters, said his firm anticipated the bankruptcy filing and was reviewing it to determine whether there are grounds to ask the court to lift the bankruptcy stay.

“The Camp Mystic defendants have done everything they can to avoid the light shining on their actions in the court of public opinion and the court of law,” the Houston attorney said. “We’re fighting them every step of the way.”

The camp and the Eastland family, which owns and operates it, have faced allegations that they ignored weather warnings, lacked a written evacuation plan and delayed moving campers from low-lying cabins as floodwaters rapidly rose. The flooding also claimed the life of camp owner and Executive Director Richard “Dick” Eastland, who died attempting to rescue campers.

Five civil suits have been filed by parents of most of the victims. The lawsuits — targeting Camp Mystic and members of the Eastland family — accuse the defendants of gross negligence and wrongful death, among other claims. They are seeking millions of dollars in damages.

The bankruptcy filing estimates Camp Mystic has more than 1,000 creditors, could owe as much as $50 million and has assets in the range of $100,001 to $500,000. It is seeking a complex case designation due to the large debt and number of creditors. 

The filings in Houston also pause collection efforts. The businesses that filed for bankruptcy protection are Camp Mystic LLC, Natural Fountains Properties Inc., Mystic Camps Family Partnership Ltd. and Mystic Camps Management LLC.

Camp Mystic, the Eastlands and attorneys for them and the associated entities did not respond to requests for comment.

The bankruptcy does not necessarily mean parents and others suing Camp Mystic will never recover damages, said Randy Pulman, a San Antonio bankruptcy attorney. They could still go after proceeds from the camp’s insurance policies and sale of its 750 acres of land in Kerr County. 

“It doesn’t spell absolute defeat, but it makes clear there is a very limited amount of assets that these families will be able to recover from,” he said. “There isn’t going to be enough money here to pay everybody.”

The real estate was assessed last year at about $15 million by the Kerr Central Appraisal District, but there’s certain to be legal wrangling over whether the land is protected from the lawsuits, Pulman said.

The bankruptcy doesn’t stop the flooding victims’ families from suing members of the Eastland family in their individual capacity, either. Several of the Eastlands have already been named as defendants in lawsuits.

Randy Howry, another attorney representing the families, said that while the filing wasn’t a surprise, the timing was.

“We’re in the middle of pretrial maneuvering at the courthouse, none of which has been going well for Camp Mystic,” the Austin lawyer said. “We were awaiting a ruling on the motion for sanctions, which we filed against Camp Mystic and its lawyers during the course of the litigation. We got word yesterday that the judge was close to issuing orders.”

Because of the bankruptcy, the judge now may not be able to rule, Howry said.

He also questioned the camp’s choice of venue, filing for bankruptcy in Houston rather than San Antonio or Austin, both of which are nearer the camp.

“In terms of fighting this, there are also other possibilities that relate to motions to dismiss because the filing was done in bad faith,” Howry said.

Chapter 11 allows the camp to continue operating while it reorganizes its finances under court supervision and develops a plan to repay creditors. If it cannot successfully reorganize or chooses to shut down, the case may be converted to Chapter 7, in which a trustee liquidates the assets and distributes the proceeds to creditors.

Attorneys for Cile Steward, the 8 year old whose body is still missing, said the filing is the latest in a string of actions by the Eastlands to avoid accountability for what happened.

“In the last year, Camp Mystic and the Eastland family have raced from one thing to the next … anything to outrun the day they have to answer for the deaths of 27 children at their camp,” attorneys Bradley Beckworth, Christina Yarnell and Blair Townsend said in a statement. “But that day is still coming. A bankruptcy may reorganize their debts. It cannot reorganize the truth.”

Beyond the civil suits, multiple investigations of the camp’s response to the flooding have raised questions that complicated the camp’s rebound.

RELATED: Camp Mystic leaders failed at almost every step during July 4 floods, Texas legislative report finds

A report delivered last week to a special legislative committee investigating the tragedy concluded that camp leadership failed in several key areas. Investigators found it lacked written emergency procedures required under state regulations and that staff members had not received adequate emergency training. It also said the camp failed to evacuate campers in advance of the flash flooding despite “ample opportunity” to do so.

The camp had sought to reopen for nearly 900 campers for the summer season but withdrew its application for a state license in April out of respect for “grieving families,” it said at the time. But state lawmakers earlier made clear they would not support its reopening, leaving the camp little choice — and little or no cash flow.

Families of the victims had packed two days of legislative hearings, weeping as they listened to details of missed flood warnings and the camp’s decision to leave the girls in their cabins until it was too late. Testimony included video of raging floodwaters with a girl repeatedly screaming “help!” in the distance.

“The Legislature will support whatever it takes to shut them down as soon as possible,” Lubbock state Sen. Charles Perry said after the hearings.

The Texas Rangers and Texas Department of State Health Services are still investigating the camp’s actions.

All told, last summer’s destructive flooding killed at least 136 people along a several-mile stretch of the Guadalupe.